The price of being a demon! The United States has lost the big order!

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Author: Rong ping source: official account: Rong Ping (id:rongping898) has been authorized to reprint

China Southern Airlines, Air China and China Eastern Airlines announced that they plan to purchase a total of 292 Airbus a320neo aircraft at a total price of about 240 billion yuan, which will be delivered in batches from 2023 to 2027.

It is understood that in this aircraft purchase contract, Airbus has given Air China a large discount, and the actual transaction price will be lower than the basic price. Even so, this transaction is still the largest order with the highest amount in the history of the three airlines, just like a rhythm to take off!

Why did the three airlines choose Airbus to sign a super contract at this time point? Why is the purchase object a320neo? What signal is released? What is Boeing doing?

First of all, since it is a business, it is naturally profitable. Due to the spread of the epidemic, the global overcapacity, the continued downturn in the aircraft sales market, and the situation in Eastern Europe, which led to the decline in the exchange rate of the euro, large-scale group purchases at this point in time will naturally receive greater discounts.

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According to the data, the total net losses of the three major airlines last year exceeded 40billion yuan, and the losses in the first three quarters of this year also exceeded 20billion yuan. In the case of soaring international crude oil prices, the financial situation of the airline company should not be too optimistic, but it is still a big deal. This shows that thanks to preferential policies and installment transactions, the heavy purchase of aircraft will not have a significant impact on the operation of airlines. Indeed, we have collected wool, which also releases a positive signal of accelerating the recovery of domestic air tourism.

Just a week ago, Airbus chose Suzhou as its R & D center and signed an online framework agreement with Suzhou Industrial Park, which will start operation early next year.

Obviously, Airbus believes that China is still the world’s most potential aviation market. If it can help China establish a complete local supply chain, it can eliminate the impact of external factors.

In fact, Airbus began to put its production line into China as early as more than ten years ago, which has brought the relationship with China closer politically. The cooperation in the aviation industry is also a traditional project of China EU exchanges. It is not surprising that it has a stable and long-term development.

Back to the transaction itself, the a320neo is the latest generation of Airbus single channel narrow body aircraft. It is an improved version of the A320. With cabin optimization, the single seat fuel efficiency has been improved by 20%, and the fuel economy is much better than many old models in China.

Narrow body aircraft is the main passenger aircraft on domestic routes and medium and short-range international routes, accounting for nearly 80% of civil aviation. It is completely necessary to upgrade in batches. The three major airlines also take this opportunity to expand transport capacity and improve market competitiveness.

Boeing’s 737max and COMAC C919 are also of the same class as the a320neo, of which 737max8 has been grounded by many countries due to continuous air accidents, and China’s Civil Aviation Administration has not fully approved the 737max go around.

COMAC C919 is a self-developed and self-produced model in China. Someone will ask, will buying a large number of foreign aircraft have an impact on domestic aircraft?

Boeing’s research results show that civil aviation of China needs 8700 aircraft in the next 20 years. The aviation market is huge, and the purchase of 292 aircraft in batches obviously cannot meet the demand. In fact, C919 has received a lot of orders, and it will not be greatly impacted by this transaction.

Even China and Russia are considering joint venture research and development of new models to completely get rid of their dependence on parts from western countries. Whether it is self-development or cooperation, domestic models are a good choice in the future shipping market.

For this transaction, Boeing, which was excluded, was naturally very sour, and also angrily claimed that “geopolitical differences continue to restrict the export of U.S. aircraft, expressing great disappointment with the procurement cases of China’s three major aviation enterprises.”

War is a continuation of politics, and so is economic behavior. Such large-scale procurement is difficult not to remind people of the recent political atmosphere.

At the just concluded G7 summit and NATO summit, the United States not only planned to invest hundreds of billions in infrastructure development for developing countries to counter the the Belt and Road, but also regarded China and Russia as challenges and threats. It can be predicted that the political struggle, economic struggle and even military struggle between China and the United States will be the theme of the future.

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In the political environment of confrontation between China and the United States, products such as aircraft are expensive, have a long service life, need stable maintenance services, and need a long-term stable trading partner. Obviously, the United States cannot play such a role, so it is not a wise choice to cooperate with Boeing, whether from security or political considerations.

The reason why China Airlines does not cooperate with Boeing is entirely caused by the hostile policy of the United States towards China. Therefore, not only aircraft, but also any large trade or long-term investment with the United States will face great political risks.

With the deepening of globalization, China’s economy is taking off, and a considerable part of the cake of world economic growth has been separated by China. The Chinese market is most favored by capital, so Europe must be the enemy of American capital, and provoking the conflict between Russia and Ukraine is a powerful means to restrict European capital.

Although the United States has tried to provoke Sino European relations and tried every means to discredit China at various meetings, European countries actually see clearly that there is no conflict of interest between China and Europe, and win-win cooperation is more in line with national interests than confrontation.

For the European Union, which increasingly wants to get rid of the influence of the United States, becoming a business partner with China is completely subjective and positive. It is not only an economic behavior, but also a means to compete with the United States politically.

For China, choosing Airbus is obviously a business decision. Although there are certain political considerations, it is by no means the starting point. Moreover, many core systems and components of a320neo are supplied by the United States, and the United States can still take a share. It is overstated to say that it is aimed at the United States.

Boeing’s criticism that China restricts the export of U.S. aircraft because of geopolitical differences is obviously aimless. What it should complain about is why the United States should adopt a hostile policy towards China and why it can’t properly solve the safety performance problem of the 737max. No matter which aircraft China chooses, it should follow the rules of market economy, not political factors.

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In fact, before the air crash and the Sino US trade war, China and Boeing had a good cooperative relationship. From 2012 to 2020, Boeing’s revenue in China accounted for 10.74% of the total revenue, once becoming the largest overseas revenue contributor in the United States.

In 2017, China aviation materials purchased 300 Boeing aircraft, mainly 737 series, in batches, with a scale and amount equivalent to this transaction, which shows that China does not treat American enterprises differently.

Whose plane caused the air crash? Who started the trade war? Therefore, Boeing’s loss of Chinese orders is entirely a problem for itself and the U.S. government. The argument of throwing the pot on China is completely untenable.

The reason why Boeing believes that China EU trade is a political trick is actually to spend the belly of a gentleman with the heart of a villain, which reflects how common and serious the U.S. government’s administrative intervention in economic and trade is.

The U.S. government has been accustomed to exercising long arm jurisdiction over foreign enterprises through its own laws for many years, providing an umbrella for state-owned enterprises to suppress foreign enterprises can be said to be unscrupulous, and its hegemonic thinking and ambition have long been rooted.

Since the Meng Wanzhou incident, the United States has constantly waved a big stick of sanctions against China and frequently sanctioned Chinese enterprises through the trade restriction act. In the face of such a rogue country, who dares to conduct large-scale trade with him.

With the United States pressing on China step by step in the Asia Pacific region, the relationship between the two countries cannot return to normal. It is only a matter of time before Boeing completely loses the Chinese market. If we cannot face up to our technical shortcomings and do not actively promote the normalization of Sino US relations, it will be difficult for Boeing to return to China.

As we said above, economic behavior is also a continuation of politics. On the premise of following the market law, we can also interpret some political signals.

The transaction between AVIC China and Airbus may be just an introduction and a harbinger of the resumption of the China EU comprehensive investment agreement. Although the EU has temporarily frozen the adoption of the agreement, it is, after all, in line with the overall interests of European countries and the general direction of EU strategic autonomy. It is an indisputable fact that East-West cooperation can achieve win-win results, and there is no way out for confrontation.

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The United States provoked the confrontation between China and the west out of its ambition to maintain its strategic hegemony. If the European Union wants to expand its influence in international affairs, it will certainly not dance with the United States. Although it is still mired in the war in eastern Ukraine, their differences with the United States and Britain are also increasingly obvious, and sooner or later they will make the right choice. We might as well let the bullets fly for a while, and let the China EU investment agreement be a little easier.

As soon as the United States led two malicious summits with China, China used a single business to tell the world that anti China is harmful to others but not to yourself. As long as you target China, you will lose China’s business. Capital is profit seeking, and no businessman will be unable to live with money because of politics.

Under the trend of global economic recession, China’s economic growth against the trend is not only the future of Europe, but also the future of the world. Cooperation and complementarity with China is the best choice to get out of the recession. It is self-evident that the United States continues to engage in confrontation, create division and provoke war.

Both China and the European Union have made money in this transaction. The United States is certainly unwilling and will immediately start to fight back. It is hoped that the European Union can weigh the pros and cons in the next game, make the choice that is most suitable for its own interests, and further on the road of independence of the European Union, rather than dancing with the United States, otherwise it will only fall a feather on the ground.

In addition, many people question why there is no domestic large aircraft C919 in the 240 billion order?

In fact, after the successful first flight test of C919, the order volume has been full. If the order volume is increased, it will not be delivered in a short time at all, and the replacement demand of the three major airlines is very urgent. If you queue in C919, you will not only have to wait a long time, but also miss the window period of Airbus discounts.

At present, the verifiable order data shows that the actual purchase quantity of C919 that can be confirmed has reached 856. In addition, there are rumors that Hainan Airlines has placed an order to purchase 200 C919 airliners that have not been confirmed. Assuming that the large purchase order of the 200 C919 is confirmed, it means that the total purchase volume of the C919 that can be confirmed will reach 1056, which is an amazing number. It is amazing that there are so many orders for a civil aviation airliner that has not yet been delivered.

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According to Jiang Liping, chief engineer of C919 manufacturing, the annual output of C919 can reach 100, which also means that the order quantity of 1056 will take 10 years to complete. For the urgent requirements of the three airlines to change planes, we can’t afford to wait. Moreover, under the background that C919 has not obtained the airworthiness certificate, it is not a rational choice to place a huge order for C919.

And after the first flight of C919, China Eastern Airlines said it would add new aircraft to the fleet. In March 2021, the airline signed an order with COMAC to purchase five C919 aircraft, becoming the first customer of C919. This shows the recognition and support of domestic aviation giants for C919. On May 14, 2022, the first C919 large aircraft to be delivered to China Eastern Airlines successfully completed its first flight test.

The C919 has not yet entered COMAC, and there is still a long time to go before mass production and application.

After the first flight, the domestic C919 began to enter the airworthiness certification stage. Only after obtaining the airworthiness certificate from the Civil Aviation Administration of China, can the C919 of COMAC be put into domestic commercial operation. Only after obtaining the airworthiness certification from the European aviation safety administration and the Federal Aviation Administration of the United States, can the C919 enter the international market.

C919 has previously passed the approval of China Civil Aviation Airworthiness Certification Center and obtained the domestic airworthiness certificate.

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At present, the key threshold for C919 to truly enter the international market is to obtain EASA and FAA airworthiness certification. Obtaining these two certifications is very important for C919’s future overseas market development. At present, C919 has applied for airworthiness certification of both at the same time.

In fact, the large orders that hit Airbus at this time also indicate that even if our domestic C919 gets the airworthiness certificate, the production capacity is still a defect. In the early stage, it may not be able to digest these domestic orders at all, which is at best the third choice besides Airbus and Boeing.

Although the C919, which we have developed for more than ten years, carries the expectations of many people, we must face the reality that the airworthiness certificate is indeed an insurmountable natural barrier in front of the C919 in a short time. Even our own aircraft, for the three major airlines pursuing efficiency, cannot buy a large number of models that can only fly in China.

At the end of the article, the author has something to say

It is rumored that Airbus’ big order was originally prepared for Boeing, which was one of the matters finalized at the previous high-level meeting between China and the United States, that is, the United States will cancel the additional tariffs on Chinese goods, and China will purchase Boeing aircraft as one of the conditions of business negotiations. And the deadline is July 1.

However, due to the pressure of public opinion caused by the two serious air disasters of Boeing and the hesitation of the U.S. government on the issue of tariff abolition, as well as the recent threat of the United States to NATO against China, which has caused serious damage to Sino-U.S. relations, China’s huge orders fell on Airbus. Of course, Airbus also gave preferential prices halfway. In short, the comprehensive effect of multiple factors contributed to the historical orders of the three major airlines.

It can be seen that the 240billion Airbus large order is not purely an economic behavior, but also contains the political element of the big country game. Airbus and Boeing are sworn rivals. The European Union and the United States behind them will also “bite” because of this big order. After all, behind economic interests is politics. By doing so, China has nailed a wedge between the United States and Europe. Boeing in the United States will be sour because of the loss of a large order, and it is also a heavy blow to the politicians behind it. European Airbus has picked up such a large order, and it will certainly work hard to keep it. It is obvious that behind the game between the two major aircraft manufacturing companies is the United States and Europe.

As for our domestic large aircraft C919, there is no shortage of orders, which is a great achievement for the civil aircraft that has not been put into commercial aviation. Moreover, we still need a long time to digest these orders and use these time to obtain the international airworthiness certificate. Therefore, while we have high hopes for our domestic large aircraft, we should give it a longer growth time, and we must not rush!

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