Profitability at Tianjin should improve as Airbus employs more Chinese personnel to replace the many costly expatriates it brought in to ensure that the plant achieved quality targets. “The biggest challenge we faced was quality,” Barron declares. Previous initiatives such as an MD-80 final assembly have failed. But Barron says that all industrial key performance indicators are at or above Airbus standards.
Another way of reducing production costs in Tianjin would be to adjust the pre-FAL production process. Some work has already been completed. The wings are equipped in Tianjin, while its structures are assembled in Xian. “We are looking at avoiding sending wings back and forth,” Barron explains.
It is unlikely that expansion of the plant will be considered. Barron also does not see “any likelihood” that Airbus might look at setting up an A330 final assembly line in China, in spite of the fact that the aircraft has proven popular with Chinese airlines.
Among various facilities added in support of the final assembly line, Airbus now has a logistics center at Tianjin. It is big enough to serve other EADS units operating in China and is already set to handle parts for Eurocopter.
As much as the Tianjin line has helped Airbus improve its industrial footprint in China, the manufacturer is still facing political barriers for deliveries to Chinese airlines. The government refused to authorize the delivery of 35 A330s to Chinese carriers as a result of the conflict over the European Union emissions trading system (EU ETS). But Barron believes this will not force the company to find new buyers for aircraft being blocked by Beijing.
If necessary, Airbus could easily find new customers for the 35 A330s, since demand for the type is strong, says Barron. “My own view is that we will not get to that stage,” he adds, implying that the governments will work out a solution.
The A330s are supposed to be delivered starting next year under the airlines' preliminary agreements to buy them, says another official.
If Airbus decides to sell the A330s to other buyers, the key time for making a decision will presumably be the point at which equipment for customizing them must be ordered. That would include the engines, which for Chinese A330 operators almost always come from Rolls-Royce.
The other aircraft that the Chinese government is delaying are 10 A380s for HNA Group carrier Hong Kong Airlines. Although the aircraft are under order, the authorities are withholding approval to import them, says the second official. Hong Kong Airlines has presumably paid nonrefundable deposits for the transports.
Airbus, meanwhile, says it will not boost A330 production to 11 per month, from about nine now, if the conflict over ETS is not resolved and the 35 aircraft cannot be delivered to China.