China places biggest Airbus order
(Agencies/AP)
Updated: 2005-12-06 15:26

China placed its biggest ever order for Airbus airliners on Monday as the jet maker's parent company, European defense group EADS, said efforts to build a strategic partnership with China were beginning to pay off.

Undated handout photo from Airbus shows the cockpit of an Airbus A320. China signed its biggest-ever deal with Airbus, ordering 150 of the European company's mid-range planes, worth nearly 10 billion dollars, during a visit to France by Chinese Prime Minister Wen Jiabao. [AFP/Airbus]

With visiting Chinese Prime Minister Wen Jiabao and his French counterpart Dominique de Villepin looking on, senior Chinese aviation official Li Hai signed an agreement to purchase 150 Airbus jets worth over $9 billion.

The Chinese purchase of the Airbus A319s, A320s and A321s - all members of the single-aisle A320 family - is "the largest single order that Airbus has ever received since it entered the Chinese market two decades ago," the company said.

The deal upstages the sale of 70 Boeing Co. 737 jets, worth about $4 billion at list prices, during a visit to China by U.S. President George W. Bush last month.

Chinese Premier Wen Jiabao (L)  meets French President Jacques Chirac at the Elysee Palace in Paris December 5, 2005. Chinese Premier Wen is on the second day of a four-day visit to France. [Reuters]

Airbus is targeting at least half the 1,800 new airliners China is expected to need by 2022 - a direct challenge to Boeing, whose planes account for almost two-thirds of the current Chinese fleet.

The planes ordered Monday will go into service with six carriers: Air China Ltd., China Eastern Airlines Corp., China Southern Airlines Co., Sichuan Airlines, Shenzhen Airlines and Hainan Airlines.

The deal came a day after the Toulouse, France-based plane maker inked a separate agreement with visiting Chinese officials that could lead to the construction of an A320 assembly factory in China - the first Airbus assembly line outside Europe.

"This isn't something we just pulled out of a hat," Noel Forgeard, joint-CEO of European Aeronautic Defence and Space Co., told reporters Monday. "There's been a long patient effort." Forgeard, who headed Airbus until earlier this year, said discussions about greater industrial cooperation with China dated back to a 1998 visit by then Prime Minister Zhu Rongji. Headquartered in Paris and Munich, EADS owns 80 percent of Airbus, while Britain's BAE Systems PLC owns the rest.

"We're putting China at the extreme summit of our priorities for the group's internationalization," Forgeard said.

Airbus's standing in China has been boosted by a major French diplomatic drive to befriend Beijing. Chinese President Hu Jintao visited France in January last year, and French President Jacques Chirac reciprocated nine months later, reciting Chinese poetry and echoing Beijing's repeated calls for mutual respect in foreign relations.

Chinese Premier Wen Jiabao (L) is greeted by French Prime Minister Dominique de Villepin prior to the signing ceremony in which China ordered 150 Airbus single-aisle A320 airliners, at Matignon, in Paris, Monday, Dec. 5, 2005. [AP Photo]

France is among the most vocal critics of the European Union arms embargo imposed in 1989.

"We continue to consider that this embargo is an anachronism," Prime Minister Villepin told reporters Monday.

Companies in all sectors stand to benefit from the French charm offensive. Among 16 agreements signed Monday by the visiting Chinese delegation, French telecommunications equipment maker Alcatel SA won a deal to design and manufacture a new broadcast satellite for ChinaSat. Other agreements included a 150 million euro ($175 million) financing contract for a new Chinese high-speed rail link.

EADS helicopter unit Eurocopter also signed a deal with Chinese aeronautics group Avic II for the joint development and manufacture of a new nonmilitary chopper, and French oil major Total SA struck an association agreement with Chinese petrochemical company Sinochem to build a new network of gas stations in the Shanghai region.

EADS shares closed 3.3 percent higher at 32.85 euros ($38.65) in Paris, where the benchmark CAC-40 was down 0.3 percent.