Airbus To Open Second A320neo Line In Tianjin

Airbus will add a second final assembly line (FAL) at its site in Tianjin, China, doubling capacity at its Chinese plant.

The announcement was made April 6 during the state visit of French President Emmanuel Macron to Beijing with Airbus CEO Guillaume Faury part of France’s delegation. 

Faury signed the agreement with the Tianjin Free Trade Zone Investment Company and AVIC. The deal also includes a general terms of agreement (GTA) with China Aviation Supplies Holding (CAS) for the acquisition of 150 A320neo family aircraft and 10 A350-900s. Both commitments had been announced earlier and do not add to Airbus’ current backlog. Airbus also signed a memorandum of understanding with China National Aviation Fuel Group (CNAF) on cooperation in producing, using, and finding common standards for sustainable aviation fuels (SAF).

Airbus forecasts Chinese airlines will need around 8,400 new aircraft over the next 20 years—equal to roughly 20% of global production.

“We are honored to continue our long-standing cooperation by supporting China’s civil aviation growth with our leading families of aircraft. It underpins the positive recovery momentum and prosperous outlook for the Chinese aviation market and the desire to grow sustainably with Airbus’ latest generation, eco-efficient aircraft,” Faury said. “Airbus values its partnership with the Chinese aviation stakeholders, and we feel privileged to remain a partner of choice in shaping the future of civil aviation in China.”

Strategic Implications

The move is significant for Airbus and its rival Boeing in several ways. First, it gives Airbus much-needed additional production capacity as the company aims to boost production of the A320neo family to 75 aircraft a month—a target it now plans to achieve in 2026. 

Secondly, the agreement shows again that China politically favors Europe and Airbus over the U.S. and Boeing. This has also been evident in the recent lack of orders for the Boeing 737 MAX and 787 from China.

Airbus, by contrast, has received two major orders from China over the past few years: the country committed to 300 aircraft in 2018 and another 292 in mid-2022, which was the first major commitment by China since the start of the coronavirus pandemic. The purchase was announced before Beijing decided in late 2022 to start lifting travel restrictions.

Chinese airlines currently have direct orders or lessor commitments for 519 Airbus aircraft, according to Aviation Week Network’s Fleet Discovery database. With a total backlog of 6,620 aircraft, the market currently represents only about 8% of Airbus’ backlog, standing well below the historical average of 20% and its forecast. For China, to come back to its normal level of firm orders, commitments for another 600 aircraft would be needed based on the current overall backlog.

Firm orders and leasing agreements by Chinese airlines for Boeing aircraft amount to 457, according to Fleet Discovery, predominantly 737 MAXs. But the country has been slow in returning the MAX to service following its grounding. And whether airlines will actually take delivery of the aircraft is adding a high degree of uncertainty to Boeing’s production planning.

BOC Aviation, a Bank of China subsidiary, is the only Chinese entity that has placed an order for Boeing aircraft recently (in December 2022), in this case for 40 737-8s. Boeing’s position is better in Asia’s other large market, India, with a commitment for 220 aircraft earlier this year. New Saudi airline Riyadh Air has also ordered 72 787-9s.

“Boeing’s share in the Chinese market has fallen from more than 50% in 2019 to about 10%, putting it in the No. 3 position behind Airbus and Comac,” Agency Partners analyst Sash Tusa wrote in a recent Aviation Week column. “Without pre-2019 levels of access and demand from China, Boeing’s total addressable market is around one-fifth smaller for the 737 MAX and at least 10% smaller for widebodies.” 

Trade relations make the situation extremely complex, Tusa believes: “If Beijing is trying to exert leverage or retaliate over U.S. trade policy moves, Boeing is the obvious line of attack. Given the further deterioration of Sino-U.S. relations recently, especially regarding Chinese access to U.S. semiconductor technology, it is hard to feel optimistic about Boeing’s return to its previous scale in China.”

Airbus has been building A320s, then A320neo family aircraft, in Tianjin since 2008. Over 600 aircraft have been delivered from there so far. The decision back then was contentious even internally because of the transfer of valuable intellectual property that China could use to build up its own aerospace sector. Tianjin currently has one FAL that is now capable of building all the basic A320neo family variants.

Combined capacity at Tianjin when the second line is operational—from the end of 2025—is estimated at 12 aircraft per month. 

Elsewhere, Airbus currently has four narrowbody lines in Hamburg, one in Mobile, Alabama, and two in Toulouse. The OEM announced a second A320neo FAL for Mobile in 2022. And Toulouse will get a second A321neo-capable FAL in the Lagardère plant adjacent to the first one that has already been announced. The two old lines at Toulouse will be closed. There are also two A220 lines in Mirabel, Canada, and another one in Mobile. 

Across all sites, Airbus delivered 516 A320neo family aircraft in 2022 as well as 53 A220s. Airbus does not disclose the capacity of individual lines or sites.

The company had ambitious plans to increase production to 75 A320neo family aircraft per month by 2025. This had to be delayed by a year because of the ongoing supply chain issues that are taking longer than Airbus management had expected and now are anticipated to drag on until well into 2024.