Airbus shares soar after plane maker lands 300-aircraft order to China worth £25.7bn
Airbus shares rose this morning on yesterday’s news that it signed a deal worth around €30bn (£25.7bn) to sell 300 planes to China.
The plane maker was up 2.4 per cent this morning after announcing the sale of 290 of its A320 models and 10 A350 XWB aircraft to China Aviation Supplies Holding Company (CAS).
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“We are honoured to support the growth of China’s civil aviation with our leading aircraft families – single aisle and widebodies,” said Guillaume Faury, president of Airbus’ commercial aircraft division.
“Our expanding footprint in China demonstrate our lasting confidence in the Chinese market and our long-term commitment to China and our partners.”
Faury is set to replace Tom Enders as Airbus CEO in the coming months when Enders steps down from the role.
According to Airbus’ latest China market forecast 2018 to 2037, China will need some 7,400 new passenger and freighters aircraft in the next 20 years. It represents more than 19 percent of the world total demand for over 37,400 new aircraft.
The deal was signed in the presence of visiting Chinese President Xi Jinping and French President Emmanuel Macron, as Xi continued his diplomatic visit to France. It is part of a range of deals signed during Xi's European visit.
The €30bn figure represents the combined catalogue prices of the planes, though plane makers usually grant buyers significant discounts on such large orders.
“China has been taking about 20-25 percent of Airbus production per year and given the A320 family is sold out at announced production rates out to 2024-25, we believe this increases the probability of Airbus moving to a production rate of 70 per month,” wrote investment bank Citigroup in an analyst note.
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Details of the delivery schedule for the planes were not released.
The news buoyed Airbus shareholders as the firm looks to capitalise on the woes of its arch-rival Boeing, which has taken a significant knock to its reputation after the second crash of its latest passenger jet range in five months killed 187 people earlier this month.
Boeing has been forced to ground all of its 737 Max jets in the wake of the incident.