Airbus Signs China Cabin Completion Deal

Airbus has signed an agreement to set up its second plant on Chinese soil in a deal that the company hopes will lead to new orders.

The EUR€150 million plant will be built alongside an existing assembly line for A320s in the northern port city of Tianjin. It will be responsible for completing cabin work on A330s.

The contract was signed during a visit by Chinese Prime Minster Li Keqiang to Airbus headquarters in Toulouse, along with two other deals on the production of cabin equipment and fasteners for assembling aircraft parts.

It came 48 hours after China agreed to buy 45 A330s worth over USD$11 billion, with plans for a possible further 30.

Despite a slowdown in its economy, China is the world's fastest-growing aviation market and is projected to order a total of 5,300 airliners over the next 20 years.

Airbus hopes the increased presence in China will lead to more demand for the A330, which is due to be updated with new engines.

Airbus opened its first non-European aircraft assembly plant in Tianjin in 2009 and extended the co-operation venture with Chinese interests to 2025, in a fresh agreement last year.

It also plans to inaugurate another non-European assembly plant for A320s in Mobile, Alabama, in September.

Negotiations to set up the new wide-body cabin completion facility at Tianjin took longer than expected, partly due to a trade row between China and the European Union over airline emissions that was settled last year.

There were also tough negotiations over the number of planes to be purchased by China in exchange for the factory investment.

Airbus had originally hoped to more than double its existing Chinese fleet of about 150 A330s by offering a regional version especially tailored for the domestic market.

Airbus has been locked in a fierce battle with Boeing for that slice of the busy Chinese market.

But the current agreement for 75 jets, which could eventually be raised to around 100, ensures continued production of the A330.