With the global economy heading south, the Chinese Aviation Administration of China (CAAC) says it wants airlines in China to delay or cancel delivery of aircraft in 2009.
The consequences of this recommendation, especially if it gains full implementation amongst the country's airlines, could have far reaching consequences outside the borders of China. Airframers haven't raised any kind of public panic about this choice, but this could further slide the industry downward.
Airbus
Another wild card in this recommendation is the A380.
Boeing
For the Chinese 787s, the program delays are a blessing in disguise. Deferred capacity growth, especially in long and thin markets, is definitely a bonus.
Backlog, Backlog, Backlog
For the major airframers, this recommendation from the CAAC is all about sustainability of the record backlogs. Boeing and Airbus leadership have always stressed the importance of geographic diversity amongst its backlog, though growth in China has always factored
For the major airframers, this recommendation from the CAAC is all about sustainability of the record backlogs. Boeing and Airbus leadership have always stressed the importance of geographic diversity amongst its backlog, though growth in China has always factored
significantly in long term planning. In the short term, slowing aviation growth by China won't impact plans that span two decades, but could leave a trail of white-tailed aircraft in its wake.
China Daily reported that China Southern, Air China and China Eastern were expecting 73 aircraft delivered from Airbus and Boeing in 2009.
The majority of China's Boeing and Airbus orders are for 737 and A320 family aircraft. In many cases, it's too late to waive off many of these orders that are already in production, but deliveries might be impacted for the 2nd half of 2009.
Airbus
Further complicating the situation for Airbus is the final assembly line now operating in Tianjin, southeast of Beijing.
The facility, which opened in September, is expected to produce four A320 family aircraft per month by 2011, and the accompanying
airport is to add a second runway by May 2009 to enable it to handle
test flights.
The first Chinese built A320 aircraft is due to be delivered in June 2009 to Sichuan Airlines.
With an overall cut in production (irrespective of China) coming in 2009, a political dilemma may present itself when confronted with leaving the Tianjin line operating at one A320 per month rather than freeze the line completely while trimming the production workforce at Toulouse or Hamburg.
Another wild card in this recommendation is the A380.
China Southern is set to get its first superjumbo (MSN031) in the fourth quarter of 2009. If it's capacity you're trying to cut, adding A380s to the fleet won't help that. If anything, this raises a larger question about the need for A380s in a struggling global economy, but that's a discussion for later.
Boeing
In the near term, 737s might be the early victim of this new policy, though China Southern is also an early customer for the 777-200LRF. The airline has six on order and its first unit is already in final body join in Everett.
For the Chinese 787s, the program delays are a blessing in disguise. Deferred capacity growth, especially in long and thin markets, is definitely a bonus.
However, Of the lower production MTOW (219 t) 787s delivered (LN7-19), 10 will go to Chinese Airlines. Even with the 2010 slip, China might be keen to wait for the LN20 block point change to take advantage of higher MTOW 787s.
Bombardier & Embraer
The significant scaling back of overall Chinese growth leaves Bombardier without a firm launch customer for the CSeries. China's AVIC I, which is building the fuselage for CSeries, was thought to be the first firm launch customer for the new narrowbody.
For Embraer, production of ERJ-145s in Harbin have been scaled back and the company is now revising delivery schedules with Chinese airlines. Grand China Air, the largest E-Jet Customer in China had received six (of 50) E-190s as of the end of September, and was reported to be re-negotiating deliveries back in October.
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