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Wed, Dec 08, 2004

Chinese Airlines Order 23 Single-Aisle Airbus Aircraft

EADS Says It's Making Progress In The Far East

EADS says it's achieved another major success in China with the signing of an agreement for 23 single-aisle Airbus aircraft. The signing took place in the presence of Chinese Premier Wen Jiabao and German Chancellor Gerhard Schroder, who is currently visiting the People’s Republic of China.

"We are very proud that China has made its choice in favor of Airbus," said EADS CEO Rainer Hertrich, who is accompanying the Chancellor on his visit. "2004 has been a very successful year for EADS and Airbus in China."

Airbus has already received 58 new orders from China since the beginning of the year. Twenty-one A320s were ordered in January by China Southern, making it one of the largest clients for the A320 in the Asia-Pacific region. Three A330-300s were ordered by Cathay Pacific Airways in April, twenty A330-300s ordered by China Eastern and six A319s by Air China in October, and a contract for eight A320s with Hainan Airlines has just come into effect.

The new order signed during the Chancellor’s visit raises the total figures of Airbus orders in China in 2004 to 81.

"Our goal is to reach a fifty percent market share for commercial aircraft in China," Hertrich said.

Airbus says it will also beef up its cooperation with China by raising its subcontracting commitment from around $30 million per year to $60 million by 2007. The objective is to further increase this to $120 million per year by 2010.

Airbus has announced its intention to establish an engineering center in China. Beginning in 2008, more than 200 Chinese engineers will have the opportunity to participate in Airbus developments and enhance their own expertise. This will enable China to become a full industrial partner in any future Airbus aircraft developments.

"In line with our long-term approach, we are planning to strengthen our presence in China," said Hertrich. "The latest successes of EADS illustrate the soundness of our strategic partnership with China. We are seeking to expand our partnership opportunities in the areas of research, development, sourcing, manufacturing and after-sales-service," added Hertrich. Eurocopter has already signed a framework contract with AVIC II in October for the joint development and production of a new multipurpose helicopter that will be available on the world market in 2010. Another contract had been signed in Paris last June to set up a production line in Harbin for the EC 120 helicopter.

On top of this, EADS sees the most promising prospects for helicopters in China as being in the areas of emergency services, rescue and law enforcement, mission segments. There, EADS is offering China the EC135 and EC145.

EADS has already entered a new phase in developing industrial and strategic partnerships with China based on joint development, production and export. The $30 million investment made by EADS in the aeronautical manufacturer AviChina in October 2003, providing a 5% stake in AviChina, opened up the way for reinforced cooperation with AVIC II in the helicopter field. This was the first-ever foreign investment in a Chinese aerospace company. EADS is supporting the involvement of the Chinese industry in the Galileo program under the umbrella of the European Space Agency ESA. A respective agreement has been signed between the European Galileo Joint Undertaking and the National Remote Sensing Chinese Center (NRSCC).

Track Record of Cooperation

The industrial cooperation between Airbus and the Chinese aviation industry dates back to 1985, when Airbus sold its first three aircraft to China. Among the 40 Asian Airbus customers are Air China, China Eastern, China Southern, Sichuan Airlines and Hainan Airlines, as well as Air Macao, Dragonair, Cathay Pacific and Air Hong Kong. Airbus predicts that China may have a need for more than 1,300 large aircraft by the year 2022, becoming world’s second largest aviation market after the United States.

The Airbus fleet in service on the Chinese mainland, Hong Kong and Macao has grown to more than 260 today from 29 in 1995. Cooperation with the Chinese aerospace industry has also proven to be very successful. Today, more than half of Airbus’s worldwide fleet contains Chinese door and wing components.

Chengdu Aircraft Corporation is one of the two suppliers in the world for the rear passenger door of A320 aircraft. The company also manufactures the main parts of the A320 nose fuselage, which includes section 11 floor grids, nose landing gear bay and frame 1. The first ship sets of these parts were delivered to Airbus in June 2004. Shenyang Aircraft Corporation produces and assembles the emergency exit doors for A320 Family aircraft, and is the sole supplier of such parts in the world. The company also manufactures fixed leading edges, wing interspar ribs, cargo doors and skin plates for the A320 Family aircraft.

Xi’an Aircraft Company currently produces electronics bay doors for Airbus A320 Family and A330/A340 Family aircraft. The company also produces fixed trailing edges for the wings of the A320 Family aircraft, as well as brake blades and medium air ducts for the A330/A340 Family aircraft. Hong Yuan Aviation Forging & Casting (HYFC), based in Sanyuan county in Shaanxi Province, is producing titanium forging parts, which are used to mount aircraft powerplants to wings. Guizhou Aviation Industrial Group produces maintenance jigs and tools for Airbus aircraft.

The first successes of Eurocopter in China go back to the 1960s, when it supplied light helicopters: Alouette, Gazelle, etc. This relationship developed in the 1970s with the sale of BO105 and Super Frelon. In the 1990s, Eurocopter strengthened its industrial cooperation for the joint development with AVIC II and Singapore Tech of the light single-engine EC 120 helicopter. Assembled in the Harbin Aircraft Industry factory, this helicopter has had a very successful career to date, with over 400 sold around the world. Eurocopter also set up a joint subsidiary with Citic Off-Shore Helicopter Company (COHC), for the maintenance of helicopters of all types (Eurocopter’s stake is 10%).

EADS also has a foothold in other sectors: In space, EADS Astrium and CASC signed an agreement in 1994 to set up the joint venture Euraspace. A contract for the first radio broadcasting satellite Sinosat 1 was then signed in 1995. The company Spot Image, in which EADS Space hold a 40% share, has twenty receiving stations spread worldwide. A terrestrial station located close to Beijing has been supplying China with geographic data beamed down by satellite since 1986. The Myun station was the first to use the images from the SPOT 5 satellite in September 2002, with the help of EADS data processing equipment.

Finally, EADS Socata has supplied over 70 training aircraft to the Civilian Aviation Flying College in Chengdu, enabling it to provide initial training each year for several hundred pilots going on to fly for all Chinese airlines.

FMI: www.eads.com

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