Airbus to ramp up sourcing in China to sell more jets - UPDATE

SHANGHAI (XFNews) - Airbus said it wants to ramp up the construction of plane parts in China to help spur sales in the country, which it predicts will need 200 superjumbo jets like its A380 over the next 20 years.

The European aerospace consortium also reiterated its projection that it will purchase 60 mln usd worth of components in China in 2007, rising to 120 mln usd three years later.

"Because we have only 15 mln usd in sourcing in China we would like to increase this number," Airbus spokesman Gu Wei told Agence France-Presse, adding that proposals being considered included establishing more joint ventures in China.

By increasing the sourcing of parts, especially for the A380 -- the new double-decker plane capable of carrying up to 555 passengers -- the European group hopes to better integrate the mainland market into its supply chain.

Already since the mid-1980s Chinese manufacturers have delivered to Airbus parts for doors, noses and wings valued at more than 500 mln usd, according to Xinhua news agency.
Five Chinese companies produce parts for Airbus planes, including emergency doors for A320s made by the Shenyang Aircraft Industrial (Group) Company and the main parts for the A320's nose by the Chengdu Aircraft Industrial (Group).

The consortium will also transfer technologies for producing entire A320 jet wings to China that will enable all the components to be produced in the country by 2007.

While Airbus planes are unlikely to be assembled in their entirety in China anytime soon, the building of major components would likely help Airbus capture a larger slice of the world's third largest aviation market.

US rival Boeing is currently the dominant supplier in China, holding a more than 60 pct market share.

Airbus, 80-pct owned by aerospace conglomerate EADS and the rest by British defence contractor BAE Systems, projected China will need 200 superjumbos like the A380 over the next two decades, and Gu said it made economic sense for the company to source more on the mainland.

"China's aviation market has huge potential not only for mid-range planes but also in the capacity for traffic growth and so the Chinese market needs larger aircraft," said Gu.

"With new product sourcing we would want China to buy more A380s and we hope that by 2008 we will add one more Chinese airline."

Earlier this year Airbus inked a deal worth some 1.4 bln usd to sell five of the planes to China Southern Airlines, although Boeing hit right back with orders for its new 787 Dreamliner, a medium-sized long-haul jet.

Gu said discussions with Chinese airlines on buying more A380s were ongoing.

The A380 is part of Airbus's plan to ramp up sales based on a strategy that hauling more passengers on a single flight will bring airlines greater efficiency.

It has sold more than 200 planes in China since 1985 and so far this year has received orders for 59 aircraft from five Chinese airlines, accounting for 20 pct of its total orders.

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