Airbus sees China, Asia as recession buffer

Monday, 19 September 2011 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Demand for new airplanes from China and Asia will provide Airbus with a buffer for growth in the event of a global recession resulting from Europe’s debt crisis, the company’s chief operating office said last week.

“So far we have 1,000 net orders (from Europe) at the end of August and the air traffic is still good,” Fabrice Bregier told Reuters in an interview.

“However, we might well expect some adjustments in the future. This is very different from 2008-2009. In this case we see a problem of some European states with excessive debt but the real economy is very good,” he said on the sidelines of the World Economic Forum in Dalian.

The euro area debt crisis has contributed to increasing concerns in financial markets that the world economy could slip into another recession. Billionaire investor George Soros said the crisis could trigger a Great Depression.

Bregier said it may be a “challenge” to avoid another recession that would bring about less air traffic and slower growth for airlines. But he said he expected growth in Asia and especially China to provide a suitable growth buffer for Airbus, a unit of aerospace group EADS.

“If there is a big recession there will be less traffic and so the airlines will not generate the cash to buy new aircraft,” Bregier said.

“Now we are in the global market, so we don’t sell exclusively to Europe or America and in our order book our biggest share comes from Asia, and China plays a big role,” he added.

Bregier said Airbus will deliver its first superjumbo to mainland carrier China Southern Airlines in a few weeks and the aircraft will be made operational in November.

Boeing, Airbus’s main rival, said on September 7 that China will need 5,000 commercial aircraft worth $600 billion over the next 20 years, a 25 percent increase on the company’s previous estimate.

Airbus, which currently has 46 percent market share in China, is due to publish its global forecasts on September 19. Bregier said the firm’s market share in China will exceed 50 percent in the next few years.

“We plan to deliver about 90 aircraft in China next year and about 100 this year,” he said.

In June, China placed an order for 88 Airbus A320 planes putting aside a bubbling trade row with Europe over a proposed emissions scheme as it sought to fuel economic growth.

The deal, worth $7.5 billion at list price and with deliveries slated for 2012-15, was signed by China Aviation Supplies and Industrial Commercial Bank of China.

Although China plans to start competing with Airbus and Boeing by building its own narrowbody passenger jets from the second half of this decade, it has ordered large volumes of Airbus A320s and Boeing 737s to feed traffic growth.

Airbus began assembling planes for the Chinese market at a factory in Tianjin, outside Beijing, in 2009. Bregier said he expects to make inroads into the China markets with sales of the new A380 superjumbo aircraft.

“I think they (other Chinese airlines) will be very interested in A380s when they see the success of China Southern... We expect other top players in China to progressively order A380s,” he said.

“The trend is clear, China will need bigger aircraft in the future and so we think with the A380, we really have a trump.”