Airbus's 20-year sales to China may top $20b
(Bloomberg)
Updated: 2006-02-22 17:19

Airbus SAS, the world's largest maker of commercial airplanes, may post more than $20 billion of accumulated sales in China in the next 20 years as it prepares to assemble planes in the country, company President Gustav Humbert said.

Airbus is evaluating four cities in China for putting together A320 planes. The company, based in Toulouse, France, plans to make as many as four A320s a month in China by 2010, producing the first aircraft in 2008, Humbert said.

A trade visitor looks at a model of the Airbus A380 aircraft at the Asian Aerospace 2006 airshow in Singapore February 21, 2006. The Asian Aerospace 2006 will be held for six days starting February 21, with the Airbus A380, the biggest passenger aircraft to date, as one of the show's highlights. [Reuters]

"If you look at the turnover we can do in 20 years with the Chinese, I think it will be even higher" than the company's forecast of $20 billion for Russia, he said Wednesday at the Asian Aerospace 2006 show in Singapore.

State-owned airlines of China, the world's fourth-biggest economy and the fastest-growing aircraft market, may buy 1,790 planes valued at $230 billion by 2023, according to Airbus' estimates. Air China Ltd., China Eastern Airlines Corp. and other carriers are upgrading and expanding their fleets ahead of the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai, filling the order books of Airbus and Boeing Co.

The company is pitching the 253-seat A350, its latest aircraft model, to European and Asian customers and expects an order from a China-based airline this year, said Airbus' Chief Commercial Officer John Leahy, without giving details.

"We expect to announce a few sales in the next few months" to carriers in China, he said, declining to name the customers. The company may also find two new customers this year for its A380, Leahy said, without giving details. The 555-seat A380 will be the world's largest aircraft when it begins flying this year.

Back to Normal?

Global aircraft orders, which surged last year to a record 2,057 units, may shrink 58 percent to between 800 and 850 in 2006, Leahy said.

"This is more of a guess than an official estimate," Leahy said on Wednesday in Singapore. "The annual trend is about 800 to 850 planes a year and we were way above the trend last year. It would seem normal to come back to the trend."

The world's airline industry may report a smaller loss this year, estimated at $4 billion from $6 billion last year, the International Air Transport Association said on Monday.

Rising air travel demand in China and India, increasing use of financial derivatives to hedge fuel costs and newer planes that burn less jet fuel may help Asia-based carriers improve their combined profit, the group said. North America-based airlines such as UAL Corp.'s United Airlines are emerging from bankruptcy protection, enabling them to report smaller losses this year, IATA said.

Airbus has received firm orders for 71 planes so far this year, with about 61 percent of the global market share, compared with Boeing's 45 planes or 39 percent of the market, Leahy said.

Airbus received 1,111 firm orders valued at $95.9 billion last year, compared with Boeing's 1,029 orders valued at $115.9 billion, according to figures presented today by Leahy.