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.
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.
At yesterday's ceremony,?six domestic
companies?confirmed orders for?
86 Airbus A320 family aircraft, worth a catalog price of
about US$6 billion.
The orders are part of?last October's?agreement for as
many as 150 A320 family aircraft Airbus clinched last October
during then French president Jacques Chirac's state visit to
China.
Shenzhen Airlines will buy 28 jets, with Sichuan Airlines
getting 18 and Hainan Airlines 13. Privately owned Juneyao Airlines
and Spring Airlines will each purchase six. The other 15 aircraft
were ordered by China Aviation Supplies Import and Export Group
Corp (CASGC). CASGC handles most of China's aircraft imports.
These aircraft will most likely be assembled and delivered in
Tianjin, Airbus said.
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.
High cost factors include transporting the aircraft sections
from Europe, hiring expatriate experts and the "learning curve"
that the Chinese workers and engineers will face.
Li said China is not looking for profits from the venture, but
to improve its aircraft manufacturing capabilities.
The joint venture's general manager will come from Airbus France
and the Chinese consortium will nominate a deputy general manager,
Bertiaux said.
"The operation and quality management of the factory, which
requires our know-how, will be in hands of Airbus. Anything related
to human resources, support and services will be arranged by our
Chinese partners," Bertiaux said.
AVIC I and AVIC II will deploy up to 80 people to serve the
joint venture for five years.
"They have promised that they will not send people we can easily
find in Tianjin," said Bertiaux, adding that the factory will hire
about 500 employees.
China has expressed a strong ambition to establish its own
commercial aircraft industry, and AVIC I and AVIC II have been the
two pillars of the Chinese aviation manufacturing industry.
(China Daily June 29, 2007)