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China-Airbus JV to deliver 300 A320 planes by 2016

By Lu Haoting (China Daily)
Updated: 2007-06-29 08:32
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Airbus plans to assemble about 300 A320 aircraft in Tianjin by the beginning of 2016, a senior company official said yesterday.

If the Tianjin factory can meet that target, Airbus will consider further cooperation in the northern port city, Marc Bertiaux, Airbus vice-president for cooperation and partnership with China, told China Daily in an exclusive interview.

Airbus and a Chinese consortium that includes China's two leading aviation manufacturers yesterday signed a joint venture contract to operate the Tianjin factory, which will start assembling the A320 family jet next summer.

China-Airbus JV to deliver 300 A320 planes by 2016

Laurence Barron, Airbus China president, shakes hands with Feng Zhijiang (right), president of Tianjin Port Free Trade Zone and Tianjin Airport Industrial Park Administrative Committee. Airbus and a Chinese consortium yesterday signed a joint venture contract to operate the A320 aircraft final assembly line in Tianjin. [newsphoto]

The joint venture is 51 percent controlled by Airbus. The remaining shares are split between Tianjin Free Trade Zone Investment, representing the Tianjin government, which holds a 60 percent stake, and China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II), each of which holds 20 percent.

Neither side of the joint venture released the investment volume.

Bertiaux said both sides have achieved "a good result of optimizing the costs." Profit will be shared according to the respective shareholdings, he said.

The Tianjin plant is expected to deliver the first A320 in the first half of 2009 and be able to assemble four jets per month by 2011.

The factory will likely be used to fill Airbus' two major Chinese orders it clinched over the past two years, said Li Lei, an aviation analyst with CITIC China Securities.

Airbus signed two orders with China in December 2005 and October 2006 for a total of 300 A320s.

Related readings:
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Analysts said the Tianjin assembly line will not be initially profitable due to the relatively high costs and low profit margins of aircraft assembly.

Bertiaux said the costs to assemble aircraft in Tianjin would be "slightly higher than that in Europe".

"The local labor costs will be lower, but other costs are much higher," he said.

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