China Bans New Orders for Airplanes
Asia: Nation's carriers also delay deliveries as many suffer losses. The actions could hurt sales of Boeing and Airbus Industrie.
From Bloomberg News
BEIJING--China froze new aircraft orders and its airlines are delaying deliveries as a slowing economy and overcapacity crimp demand in what may one day be the world's largest aviation market.
The ban on orders and the delays could hurt sales in China of Boeing Co. and Airbus Industrie(). Both companies view China as potentially the biggest market for new aircraft outside North America during the next two decades.
Most of China's major airlines reported losses in the first half of the year. Carriers are slashing fares to fill seats even as new aircraft bloats capacity.
"We are not approving new orders because we have already got many planes," said Liu Wanming, planning division chief of China's Civil Aviation Administration, which coordinates the nation's aviation industry.
A spokesman for Airbus in Beijing said the European group isn't aware of any moratorium on new orders. Boeing officials were not available for comment.
The ban on new orders will be tested next week, when French Prime Minister Lionel Jospin arrives in China for a two-day visit. Transport Minister Jean-Claude Gayssot will be among those accompanying Jospin.
In recent years, China has tied all big new orders of aircraft to visits by senior American or European leaders. Aircraft are one of the biggest exports to China from Europe and the U.S., which already have large trade deficits with China.
China ordered 10 A-321 aircraft from Airbus during a visit to Beijing by French President Jacques Chirac in May of last year.
Liu said Chinese airlines won't cancel existing aircraft orders. Still, several Chinese carriers are seeking to delay delivery of some of the aircraft, Liu said.
China Eastern, one of Airbus' biggest customers in China, may be the first to announce deferrals.
"We were going to receive 10 [Airbus] A-320s next year," said Zhao Yan, an official in the corporate secretary's office of China Eastern. "But now we've decided to have eight because the market is not so good."
China Northern Airlines, a regional carrier, may also delay plans to accept Airbus A-321s by up to a year, said an official in the airline's marketing department.
China Southern, which has China's biggest fleet in terms of number of aircraft, also put a hold on new orders.
"In the near term, we don't have any purchasing plans," said an official in the airline's planning department. "The market is not good and, even next year, we don't expect it to improve."
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Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html Bill's song: "Forgive me when my instincts start stinking; I'm easily led when my little head does the thinking." (lyrics by John Hiatt.)