China Orders 300 Boeing Jets; in Pact for Plant, Xinhua Says

 

China signed a deal with Boeing Co. to build a 737 aircraft completion center in the country after handing the planemaker orders for 300 jets during President Xi Jinping’s state visit to the U.S., the official Xinhua News Agency reported.

Commercial Aircraft Corp. of China Ltd., also known as Comac, signed a cooperative agreement with Boeing for the center, the agency reported without elaborating. The report also didn’t provide details of the plane order.

Workers assemble a Boeing Co. 737 airplane at the company's factory in Renton, Washington.

Photographer: Mike Kane/Bloomberg

A 737 completion and delivery center will be the first facility of its kind outside the U.S. for the Chicago-based Boeing. European planemaker Airbus Group SE already has a similar facility in Tianjin, near Beijing as the two planemakers compete to win orders from a country poised to become the world’s biggest aviation market in two decades.
“The emerging middle class in China is helping to boost demand,” said Mohshin Aziz, an analyst at Malayan Banking Bhd. in Kuala Lumpur. “Most of the planes ordered will be for growth, and very few will be for replacement.”
Boeing China didn’t immediately respond to an e-mail seeking comment.

Important Discussions

Boeing and Airbus were poised to reap a haul of aircraft orders from Chinese airlines as central planners plot growth through 2020. Boeing was exploring whether to open a factory in China to complete work on its top-selling 737-model jetliners, a person familiar with the matter said earlier this month.
Ray Conner, Chief Executive Officer of Boeing commercial airplanes, said in a memo to employees Tuesday that it’s in "important" discussions with China about possible sales agreements and partnerships. The China discussions are at a “sensitive stage” and it won’t result in layoffs and employment reductions for Washington state 737 production, according to his memo.
China is Boeing’s largest international market, accounting for about a quarter of Boeing deliveries so far this year.

Airbus in Tianjin

China has encouraged foreign planemakers to expand their industrial base as its fledging aerospace industry takes shape. Airbus assembles single-aisle A320 aircraft from its Tianjin factory, that mostly go into the Chinese market. The European planemaker said in July it was finalizing an agreement with Chinese authorities for a completion center for its A330 widebody model.
China is poised to displace the U.S. as the world’s biggest aircraft and travel market in two decades, according to Boeing. It predicts airlines will need to add 6,330 new planes worth $950 billion by 2034 to keep pace with travel growth.
Air China Ltd., China Southern Airlines Co. and China Eastern Airlines Corp., the three biggest state-owned airlines, are expanding fleets as decades of economic boom enables more people to travel in the world’s most populous nation. A rash of budget airlines have also started in China to compete with the national carriers.

Biggest Market

China will become the world’s biggest air passenger 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 operate to, from, or within Mainland China every week, or about 10 percent of world total, according to IATA.
Airlines in China that will have more than 100 planes on their fleet will increase to 13 by 2020 from six as of November 2014, consultant CAPA Centre for Aviation said last year. China Southern is Asia’s biggest carrier by fleet size with over 400 aircraft. It moved more than 100 million passengers last year.