Airbus A350 and A320neo Ordered By China

Air China and its subsidiary, Shenzhen Airlines, have secured a combined contract for 55 aircraft from Airbus to renew and expand their fleets.

As part of a continued pivot towards more efficient widebody and narrowbody jets, the deal is valued at USD 12.4 billion on list prices. It covers single-aisles and widebodies to ensure a strong mix.

Airbus’ Newest Order From China

Air China disclosed the purchase in a filing with the Shanghai Stock Exchange, confirming that it would take on 15 Airbus A350-900s to support its mainline long-haul ambitions.

The A350-900 is a jet that the airline already operates and is thus familiar with. A further purchase ensures commonality continues, but brings additional capacity and room to retire older jets.

The second component of the deal centres on Shenzhen Airlines, which will separately acquire 40 A320neo family jets, with a mix of variants depending on the final configuration and the mix deemed best suited.

Based on the list price, this contract exceeds USD 9 billion. However, substantial price concessions were noted in the filing, indicating a lower transaction value.

Discounts are often passed on to major customers, especially when buying in bulk. China, needing new jets, has committed heavily to Airbus’ inventory over the last 6 months, and discounts have played a big part in that.

The deliveries of the new aircraft are scheduled in batches from 2029 through 2032, with the A350-0900s expected at the beginning of the next decade and the A320neos towards the backend of this and into the early-2030s.

For the companies, it’s a plan that aims to ensure replacement efforts have the necessary support so that older planes departing do not create a capacity gap. Additionally, allowing growth to occur with demand increases, necessitating new planes not strictly to replace but to increase seat capacity.

A Theme Emerges In China

This order from Air China and Shenzhen Airlines is not the first, and very likely not the last, time China will be purchasing new Airbus planes under multi-year commitments from three major state-owned groups, with deals this year worth tens of billions.

China Eastern is committed to over 100 A320neo family jets, with deliveries starting in 2028, and to a contract worth almost USD 16 billion. Then, China Southern separately and Xiamen combined for 137 A320neo family aircraft, valued at over $20 billion at list prices.

For these state-owned airlines, there has also been an emphasis on placing new widebody orders, which, while not yet at the rate of the A320neo family jet commitments, are expected to heat up. Air China’s latest batch of A350s signifies that long-haul capacity is just as important as short-haul operations.

IATA has warned on several occasions that, for many reasons, China’s reluctance in previous years, due to tensions or a pandemic, has put added pressure on the commercial aircraft fleet, despite these near-term orders.

With delivery slots scheduled so far in advance, the reluctance to place new contracts earlier this decade means airlines are scrambling amid higher fuel costs and spiralling maintenance fees, with replacements still years away, into the next decade.

Despite this, the latest commitments show a desire to rectify this, even if it comes too late, with a push to secure production slots in a market where pressure on availability is becoming a bigger concern for airlines.