Airbus wins 60-plane order from china eastern after EU retreat on CO2 charges

Nov. 26, 2012
Bloomberg Hong Kong Airbus has won an order for 60 A320 planes from state-backed China Eastern Airlines, less than two weeks after the European Union backed down in a dispute with the government in Beijing over jetliner-emission levies.

Bloomberg

Hong Kong

Airbus has won an order for 60 A320 planes from state-backed China Eastern Airlines, less than two weeks after the European Union backed down in a dispute with the government in Beijing over jetliner-emission levies.

China Eastern received a "substantive" discount to the list price of $5.4 billion (Bt165.8 billion) for the single-aisle planes, it said in a statement from Shanghai on Saturday, adding that Toulouse, France-based Airbus also agreed to take 18 regional jets off its hands.

EU plans to impose carbon dioxide-emission fees on flights in and out of the bloc were suspended on November 12 after countries including China, India and Russia threatened retaliatory steps. Airbus parent European Aeronautic, Defence and Space (EADS) had said the levies might cause China to refuse to take its planes.

"I suspect there's a message there," said Sandy Morris, an analyst at Jefferies International in London with a "buy" rating on EADS China has been light on A320 orders for a while now and it looks like Airbus held some production slots back until this was resolved. It's called looking after your customer."

The A320s, due to arrive from 2014 to 2017, will be used mainly on domestic routes, according to China Eastern, which last year switched an order for 24 Boeing 787 wide-body planes to 45 smaller 737s because of waning long-haul demand.

The airline will sell eight Bombardier CRJ planes and 10 Embraer regional jets with a book value of 1.5 billion yuan (Bt7.3 billion) to Airbus, it said in the statement.

China was pleased with the EU move to suspend the plan for emissions charges, Xia Xinghua, deputy director of its aviation regulator, said on November 13. The Asian giant's airline association said in June that carriers would snub a deadline for filing emissions data and that the government would support them.

Three calls to China Eastern's offices outside regular office hours went unanswered on Saturday.

Airbus chief executive officer Fabrice Bregier said in September that China was withholding signature on 35 to 45 wide-body A330 planes because of the emissions dispute. A contract for those aircraft would have given a "bigger signal" regarding current Chinese attitudes, Jefferies' Morris said.

Airbus, which has an A320 assembly plant in China, won an order for 50 of the planes from the leasing arm of state-controlled Industrial and Commercial Bank of China in August.

China and other nations had said the EU should wait for a global emissions programme being drawn up by the United Nations' aviation agency rather than push ahead with a regional plan.

The levies are designed to curb C02 output associated with global warming.

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