Airbus is looking to expand its presence in Asia, specifically China and Vietnam. The company has agreed to supply Chinese companies with 160 aircraft, which amounts to $15 billion.
The reason for this move is due to expectations in the Chinese commercial airline market. The United States grew one percent last year whereas China grew nearly 10%. Airbus has reportedly reached agreements with Chinese companies to produce the A320 model until 2016—eventually switching to a newer model, the A320neo. The airbus chief has been paraphrased in the article saying that he hopes that this foothold in the market will help sell hundreds of aircraft over the next decade.
The stakes are high being that the pricing of an A320 is $91.5 million and an A320neo is $100.2 million. Airbus is a European plane maker and its primary competitor is Boeing, an American plane maker. If the American market is growing at a sluggish rate and the Asian market has such a high demand for aircraft, then Airbus securing contracts with Chinese companies ensures that they will be the ones benefitting from the increasing demand in Asia. Being that these companies are huge, I am sure that the eventual success of Airbus or Boeing in the Chinese airline market will dictate fairly large numbers of jobs. I guess my question is if the Asian airline market is such a potential goldmine, then what is Boeing doing as Airbus’ primary competitor.