China signed a deal to buy 130 planes from Airbus Group SE worth $17 billion, firming up purchase options announced earlier this year and intensifying the race to dominate what’s projected to become the world’s biggest aircraft market.
The agreement for 30 twin-aisle A330 and 100 single-aisle A320 planes was signed Thursday during a Beijing meeting between Chinese Premier Li Keqiang and German Chancellor Angela Merkel, Airbus said in a statement. The purchase was among a number of deals signed at the meeting.
Airbus and Boeing Co. are competing to carve up the Chinese aircraft market, expected to become the world’s largest over the next two decades. China’s economic growth and the emergence of budget airlines are making air travel affordable to more people, prompting carriers such as Air China Ltd. and China Southern Airlines Co. to expand their fleets.
“Chinese demand for travel is growing and China will need more planes to meet that demand,” said Shukor Yusof, founder of Endau Analytics consultancy in Singapore.
The 30 A330s firm up options taken in June, when China announced an order for 45 of the wide-body aircraft plus options for 30 more. The follow-on order will help Airbus bridge the gap as it moves from the existing A330 model to a variant with more fuel-efficient engines that will enter service in 2017.
The planemaker announced plans last December to cut monthly production to six A330s a month by 2016, from 10 now, as it transitions to the newer model. An order for 30 more planes means five months of work for the A330 line.
Airbus shares rose as much as 2.5 percent to 61.13 euros and were up 0.8 percent at 12:04 p.m. in Paris. The stock has surged 45 percent this year, valuing the company at 47.4 billion euros ($51.9 billion).
China has encouraged foreign planemakers to expand their local footprints as its own fledging aerospace industry takes shape. Airbus assembles A320s, most of which go to the Chinese market, at a factory in Tianjin. The European planemaker said in July it was finalizing an agreement with Chinese authorities to build a completion center for A330s.
Boeing won an order last month for 300 jets from Chinese carriers and lessors. The company said at the time it would soon open its first Chinese plant for 737 single-aisle planes.
Chinese airlines will need 6,330 new planes in the next 20 years, worth some $950 billion, according to a Boeing forecast.
China’s growing demand also is attracting interest from Russia, which plans to work with China on a wide-body plane that would compete with Boeing and Airbus jets. Russia’s United Aircraft Corp. and Commercial Aircraft Corp. of China, known as Comac, are discussing a work plan building on a memorandum of understanding signed in May 2014, Russian Deputy Industry Minister Andrey Boginsky said earlier this year.
China will become the world’s biggest air travel market by 2034, with one in five passengers traveling to, from or within the country, the International Air Transport Association said in April. About 70,000 flights — some 10 percent of the world’s total — operate to, from, or within mainland China every week, or according to IATA.
By 2020, 13 Chinese airlines will have more than 100 planes in their fleets, up from six carriers as of November 2014, the CAPA Centre for Aviation said last year. China Southern is Asia’s biggest carrier by fleet size with over 400 planes, which moved more than 100 million passengers last year.