China to Order 28 Airbus Planes in Hit to Boeing

China will order 28 planes from Airbus Industrie worth about $1.8 billion, French President Jacques Chirac announced after meeting Chinese President Jiang Zemin in Lyon.

Airbus beat Boeing Co., the world’s largest airplane maker, for China’s first order since October 1997, loosening Boeing’s stranglehold on the Chinese market and signaling optimism about prospects for air traffic in a market that’s expected to grow twice as fast as the rest of the world. The contract, not yet signed, will include eight long-range A-340s and 20 planes in the A-320 family, Chirac said.

Airbus has long trailed Boeing in the Chinese market, and though it has been making strides since the mid-1990s, it stands well behind. About 65% of Chinese carriers’ fleets are Boeing planes, compared with around 20% for Airbus.

A year ago, both airplane companies became nervous when China called for a freeze on new aircraft orders amid overcapacity in a slowing economy. Earlier that year, China had said it planned to order $124 billion of planes over 20 years.

“Apart from any politics, the significance here is that Boeing with the 737 had a near-monopoly on the Chinese domestic market for the past 20 years,” said Doug McVitie, managing director of Arran Aerospace, a forecasting firm based in Scotland. Now, “the Chinese government is not ordering Boeing’s new-generation [planes] to replace the widely used 737s, they’re ordering Airbuses,” he said.

China placed its last order with Airbus in May 1997, for 30 aircraft worth $1.5 billion. The order came after France decided not to back an anti-China resolution at the United Nations human rights conference that April. Boeing’s last order from China was in October 1997.

Chirac said China’s order for planes in the A-320 family would be split between the A-319, which seats 124 passengers, and Airbus’ newest aircraft, the A-318, which seats 107 passengers.