China Weighs Massive Airbus Deal

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00:00What do we know about the extent of Chinese appetite for Airbus aircraft then? Good morning, Benny.

00:06Good morning from Berlin. So yeah, there's generally big appetite from China for aircraft,

00:11both Boeing and Airbus. But the problem is that right now, China is not buying Boeing aircraft

00:17because of the political spat that's going on between Washington and Beijing. So Airbus is

00:22really the player in town. And what we're hearing, this is according to people that we spoke with,

00:28is that there could be a big deal unfolding next week. The way China buys its aircraft is a little

00:34different to most other countries where, you know, a single airline will negotiate with a

00:38plane maker. China does this centrally. They have sort of a central umbrella organization that then

00:42distributes the aircraft among its main airlines. So that's why you sometimes get these huge numbers

00:48out of China. So we are hearing somewhere between 250 and maybe even as high as 500 aircraft.

00:54Obviously, not all in one fell swoop in terms of deliveries. That would unfold over years. But

00:59it'd be a huge bonus for Airbus. It would really help them cement their market share in China, which

01:05is already close to 50 percent. And it would take them above that. So really an important win for

01:10Airbus if it does unfold. So how does a deal like this reshape the battle between Airbus and Boeing then?

01:17Well, we saw a couple of weeks ago when Donald Trump went to the Middle East that they that region bought

01:25a lot of Boeing aircraft. And that gives you a sense that aircraft purchases, these large orders,

01:30particularly when there's a government involved, tend to turn into a bit of a diplomatic tool. So

01:35Trump managed to bring in a big business for Boeing. And now we think that the same might happen

01:41when French President Emmanuel Macron and the German Chancellor Friedrich Mertz go to Beijing next

01:47month. So there's always this sort of political component behind it. Both sides, the Europeans,

01:53but also the Americans trying to strengthen their national champions. And that really is sort of what

01:58the duopoly is about. You still have only those two plane makers to choose from. China is trying to build

02:03its own aviation industry, its own rival to the 737 Boeing plane and the A320 Airbus. But so far,

02:12that remains a local and at best regional phenomenon. But it's something that they have to watch,

02:18Airbus and Boeing, if they want to maintain a foothold in this crucial market that is China.

02:23And you've nodded to this already, Benny, but there's diplomacy always when it comes to aviation

02:29orders. And is this a way for President Xi to send a message to President Trump? President Trump wants

02:34a meeting. Xi seeming a little more elusive and not quite so keen to have that phone call. And here

02:40we've got a trade deal in the works surrounding European aircraft. Yes, you're absolutely right,

02:47Anna. I mean, that sends a very clear signal that right now, China remains open to business,

02:52but just not to the US. And we had that, the message from Trump this morning saying that

02:57Xi remains a very difficult customer to work with. He wants a deal, but he's proving elusive.

03:03And we also know that China has essentially stopped taking deliveries of Boeing aircraft. So while

03:08they have planes on order, right now, that entire business for Boeing is on ice. And this is a key

03:14market. Yes, there are markets like India. Yes, there is global demand for aircraft. But you can't,

03:19if you're Boeing, you can't just sort of ignore the Chinese market. So hopefully over time,

03:23they will get back into that market. The question is, will Airbus, by that time, by the time that

03:29Boeing comes back, will they have strengthened their position to a point where it's going to

03:33be very difficult for Boeing to really see eye to eye with their key rival?

03:37Speaker 282 –

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