Airbus rises on prospect of huge Chinese order

BENGALURU — Shares in Europe’s Airbus rose on Wednesday as evidence of talks to sell hundreds of planes to China gathered pace ahead of a summit of European and Chinese leaders in July.

Talks involving a potential mega-deal with China have been in the works for more than a year as Beijing studies options to feed the growth of its domestic carriers in the midst of trade tensions with the US, home to rival Boeing.

Bloomberg News, citing people familiar with the matter, reported that a deal for up to 300 narrow-body and wide-body Airbus aircraft could be sealed as soon as next month when European and Chinese leaders hold a summit in Beijing. The order could rise to as many as 500 aircraft, the report said. Shares in Airbus rose more than 3%.

Airbus declined to comment on the report.

Reuters reported in April that China had been in on-off negotiations for at least a year to place an order for up to 500 Airbus jets — talks straddling the change of administration in the US and deepening US-China trade tensions. Industry sources said the talks are an extension of discussions over an order for hundreds of jets that surrounded a visit to France by Chinese President Xi Jinping last May.

In April last year, Reuters reported that Airbus was in talks over an order for hundreds of jets ahead of the visit. No deal was concluded during the trip and Bloomberg reported that Airbus was looking at selling 100 A330neo jets.

Tariff war

Earlier this year, industry sources said the scale of a deal being discussed, as a US-China tariff war has effectively frozen Boeing out of China, had expanded to 500 aircraft.

China has frequently signalled large jet orders timed to coincide with state visits, holding out the prospect of a major announcement as a carrot in wider diplomatic negotiations.

Industry sources said negotiations frequently go down to the wire and are not guaranteed to result in a deal, while Chinese airlines historically tread carefully over all major purchase decisions at times of geopolitical uncertainty.

One person familiar with the process said the timing of any deal remained unclear and could drift towards later this year.

Chinese airlines face pressing needs for aircraft after the state purchasing agency held back on placing major orders since an earlier round of trade tensions under the first Donald Trump presidency.

Airbus has said it expects China’s traffic to grow by about 5% annually over the next two decades.

The prospect of a major new Chinese order coincides with surging demand for new aircraft from India, where flag carrier Air India is in discussions for a large new order of about 200 planes and IndiGo expanded an Airbus order earlier this week.

Reuters