Chinese airlines place massive Airbus A320neo family order

China’s three state-owned airlines will boost their combined fleet by more than 300 planes, with a major Airbus A320neo family order announced today. Air China, China Southern, and China Eastern will each take about 100 single-aisle aircraft, all expected to be delivered between 2024-2027.

The airlines note that the orders are to replace and update existing aircraft, as well as to “supplement future capacity” growth.

The aircraft are expected to be delivered as follows:

• China Eastern – 100 aircraft
• Air China – 64
• Shenzhen Airlines (subsidiary of Air China) – 32
• China Southern – 96 + 19 leased

While the orders are signed, Airbus has not yet added the aircraft to its backlog. In a statement the company says that step is pending “relevant criteria being met.”

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The trio of airlines have a tradition of ordering aircraft as a group. Or, perhaps more accurately, the Chinese government has a habit of placing large orders like this and the divvying up the planes among the three. Today’s order, at least in that context, makes a lot of sense.

“These new orders demonstrate the strong confidence in Airbus from our customers. It is also a solid endorsement from our airline customers in China of the performance, quality, fuel efficiency and sustainability of the world’s leading family of single aisle aircraft.” said Christian Scherer, Airbus Chief Commercial Officer and Head of International. “We commend the excellent work by George Xu and the entire Airbus China team as well as our customers’ teams for having brought to conclusion these long and extensive discussions that have taken place throughout the difficult COVID pandemic.”

Interesting Timing

The timing of the announcement is somewhat surprising, Historically large orders like this would be tied to a state government visit or other major event. That is not the case here.

Airbus did announce development of the Airbus China Research Center in Suzhou last week. That facility is focused on Hydrogen powered flight, but maybe its timing contributed to this announcement.

Also, the Farnborough Air Show is set to take place in two weeks outside London. This massive order is the sort of thing that aircraft manufacturers would love to announce at the show. Preempting that opportunity on a random Friday is unexpected. Though perhaps owing to China’s current COVID-zero policies it would be more difficult for the airline executives and other officials to get to Britain for that event?

The only major political event currently in China is the 25th anniversary of the Hong Kong handover. Tying this announcement to that would be a questionable linkage in many ways. And it certainly would be an awkward, indirect hit against Cathay Pacific.

Then again, consolidating power into the mainland and marginalizing Hong Kong seems to be a big part of the China’s playbook for the past few years, even before COVID changed the rules further.

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Pushing Tianjin’s limits

Delivering roughly 300 new planes in four years would account for roughly all of the capacity at Airbus’s Tianjin completion center. Late last year the company announced plans to expand the Tianjin facility to accommodate the A321neo line as well, adding another location for final assembly of the larger – and more popular – aircraft type.

Whether all the aircraft pass through that facility or not remains to be seen, but this order does take advantage of the company’s investment in the country.

Boeing shut out

Finally, the order comes as Boeing‘s 737 MAX still has not returned to service in China. The Chinese government was the first to ground the type in March 2019, following a pair of fatal crashes. While the government stated in December that the planes are – with some updates – airworthy again, the trio of airlines have shown no indications of progress towards resumption of operations or deliveries.

Indeed, the opposite may be true. China Eastern removed the type from its fleet plan guidance earlier this year, raising questions as to whether the planes would ever be delivered.