In response to controversial new EU regulations, China may renege on a $14bn deal to purchase Airbus aircraft.
As the world's fastest growing aviation market, China's announcement to suspend the purchasing of 10 Airbus A380 superjumbos and 35 long-haul A330s is likely to increases tensions in the row surrounding the EU's new Emissions Trading Scheme. The new cap-and-trade proposals would force carriers entering the Eurozone to pay 1% of total fuel costs, which could set Chinese airlines back as much as 800 million yuan ($127 million) in 2012.
Southern China have already taken delivery of China's first A380 Image: EADS |
Airbus, Europe's biggest planemaker, announced that China had blocked the $14 billion deal, but did not specify which airlines were involved. Industry sources said the A380s were earmarked for Hong Kong Airlines, a parent of Hainan Airlines.
A total of 55 aircraft are now involved in the dispute, which could potentially cause long-term damage to the marketplace. While the deposits have already been paid for the A380s, the A330s are still being negotiated or waiting for official approval from the Chinese government, making them more vulnerable to cancellation.
Head of Airbus' public affairs and communications, Rainer Ohler, has voiced concerns over the cancellations, claiming: “Aircraft sales are different from selling wine or cars, you can't switch the sales button from off to on from on day to another. A red light in aircraft sales can destroy years of sales efforts and damage-repair will take years.” The stake were raised further by rival Boeing, which hinted at billions of dollars of fresh sales for 2012.