China Negotiating $16 Billion Deal to Buy Airbus Jets

In another move to further enhance its rapidly expanding travel industry, China is negotiating a deal of up to $16 billion to purchase 50 to 70 Airbus jets.

The deal is expected to include standard A330-300 wide-body, long-haul jets and a Regional version optimized for domestic and short regional flights.

Negotiations began some 18 months ago, and are part of plans to create a cabin-completion plant in Tianjin alongside its current assembly plant for smaller A320 jets. The deal could be finalized on July 1, when Chinese Prime Minister Li Keqiang visits Toulouse, France. China often completes airline purchases during diplomatic visits, but deals sometimes are postponed at the last minute.

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Airbus and Boeing have been competing to sell jets to the Chinese market. The A330 Regional is identical to the main model, but has a specially adapted engine maintenance package and a restricted maximum take-off weight that enable Airbus to sell it at increased discounts to help increase the number of sales.

Airbus had hoped to sell up to 200 of the Regional jets to China, but the deal would guarantee nearly a full year of production of the A330, which was introduced in 1995. It is one of Airbus’ most profitable aircraft, and recently was boosted by delays in delivering the Boeing 707. Sales have fallen as new lightweight passenger jets have entered the market, however.

Airbus has seen tremendous growth in the nation, with more than 1,100 of the company’s aircraft in operation with Chinese airlines. The in-service Airbus fleet in China has expanded by 50 times in less than two decades.

China also boasts a growing number of Airbus manufacturing and support operations, including the A320 assembly plant in Tianjin, the company’s first outside of Europe. The plant began operations during September 2008 as a joint venture involving Airbus and a Chinese consortium of Tianjin Free Trade Zone and China Aviation Industry Corporation.

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