Airbus looks to China for its A380 jumbo amid sluggish global sales

BEIJING (Reuters) – China's Commercial Aircraft Corp. of China Ltd. (COMAC) on Tuesday signed 130 new orders for its C919 passenger jet with four Chinese leasing firms, after the plane took its maiden flight in May this year.

COMAC is leading China's efforts to become a key player in the global civil aerospace market, threatening the dominance of US and European rivals Boeing Co and Airbus.

The deals take total orders for the C919 single-aisle aircraft to 730 planes from 27 customers.

China Nuclear E&C Group placed an order for 40 jets, while Huabao Leasing and AVIC International Leasing each signed up for 30 of the aircraft, according to a statement from COMAC.

Agricultural Bank of China (ABC) Financial Leasing Co. Ltd. became the first customer to make a second order for the C919 jet, making 20 firm orders and an intention to buy 10 more.

ABC Financial Leasing has made down payments of about 500,000 yuan ($75,882.90) for each firm order, the firm's chairman Wang Yigang told reporters. COMAC did not ask for down payments before the jet's maiden flight, industry sources say.

"Our confidence in the C919 firmed after the plane's successful maiden flight," Wang said, declining to give more details on pricing. The firm signed up for 45 C919 jets in 2012.

Wang added the firm was in talks with both foreign and domestic airlines to lease out the planes, with a focus on carriers in regions such as Central Asia and Africa that were involved in Beijing's Belt and Road initiative.

COMAC, though still some way away from delivering the first C919 for commercial use, is pushing towards getting it certified in Europe and the United States to open up markets beyond those that accept China's certification standards.

Separately, COMAC predicted Chinese airlines will need 8,575 new planes worth $1.21 trillion over the next 20 years as strong travel growth continues.

This was higher than a recent forecast by Boeing, which said the country's airlines would spend $1.1 trillion on more than 7,000 planes for the period to 2036.

BEIJING (Reuters) – Chinese airlines could need between 60 and 100 Airbus A380 jets over the next five or so years as passenger traffic grows, the plane maker's China head said on Tuesday, amid rising questions over future demand for the super jumbo.

Strong demand in China – if translated into orders – would be a major boost for the A380, the world's biggest jetliner, which has faced sluggish demand as airlines shift focus towards a generation of nimbler, more fuel-efficient long-haul planes such as the A350 and rival Boeing Co.'s 787.

China is the world's fastest-growing aviation market and is a key battleground for Airbus as well as Boeing which recently predicted the country would spend over $1 trillion on planes over the next 20 years.

"When I look at the market flow, the passenger flow, route by route and the economics, I'm fully confident that the Chinese carriers will need a minimum of 60 A380s over the next 5 to 7 years," Airbus China Head Eric Chen said at an event in Beijing.

Airbus has sold five A380s to China Southern Airlines Co. Ltd. but has otherwise failed to penetrate the market with the double-decker jet despite its robust demand forecasts.

The aircraft manufacturer believes the A380 will come into its own in markets that face booming tourism and congestion like China, but the aircraft has struggled to compete with smaller and more flexible twin-engined models.

In July, Airbus signed an agreement to sell 140 A320 and A350 planes to China in a deal worth almost $23 billion. China represents around 22 percent of Airbus global deliveries.

"What I can say is that if one airline takes the lead to order a large number of A380s, the others will follow. I would expect a domino effect and I'm working on it to produce that domino effect that has not happened yet," Chen said.

He admitted though that it would not necessarily be an easy task to win over Chinese buyers.

"A lack of confidence to operate the A380, that is something to work on continuously with the airlines in China," he said.

Europe's largest aerospace company will on Wednesday inaugurate a completion and delivery center for its A330 jet in the northern Chinese city of Tianjin. The facility is Airbus' first for wide-body aircraft outside Europe and is expected to deliver its first A330 aircraft this year.

Francois Mery, chief operating officer at Airbus China, said that there was talk of placing more higher-value work in China, as the company has set a target of doubling its industrial cooperation activity in the country to $1 billion by 2020.

"It's not only about the figure, it also about the content," he said.

"They have the ambition of getting into the business, making their own aircraft, they need to develop all kinds of things. And so without being naive, of course we are working with them."

Airbus' comments came as the Commercial Aircraft Corp. of China Ltd. (COMAC), which is leading China's efforts to become a key player in the global civil aerospace market, on Tuesday announced 130 in orders for its C919 jet.