Airbus CEO Sounds Alarm Over China Market as Omicron Wave Hits Country
Intensifying clampdowns to contain omicron could potentially impede Airbus’s ability to supply its customers in China.
(Bloomberg) -- Airbus SE Chief Executive Officer Guillaume Faury raised a note of caution on the planemaker’s outlook for this year, citing the spread of omicron in China, its biggest market for aircraft deliveries.
The European jet manufacturer is closely watching the situation in China, the destination for every fourth aircraft in 2021, Faury said. With the Winter Olympics in Beijing just a month away, the country has imposed increasingly strict local lockdown measures, mirroring its response to containing earlier coronavirus waves.
“Omicron has the potential to significantly change the picture in China compared to 2020 or 2021 but for the moment we don’t see disruptions or risks,” Faury said. “We have a strong presence in China so that’s something that’s really close to our business.”
Intensifying clampdowns to contrain omicron could potentially impede Airbus’s ability to supply its customers in China, as well as to blunt demand for more planes. An outbreak has caused authorities to clamp down on movement in the port city of Tianjin, where the planemaker has a final assembly facility for its A320 family of single-aisle jets. Production hasn’t yet been impacted, Faury said.
He’ll be paying close attention to developments there, the Airbus CEO said on a conference call after reporting an 8% increase in deliveries last year.
Travel Comeback
Airbus shares were little changed in Paris on Tuesday after the comments Monday night. The company is gearing up for a massive production increase as demand returns following the Covid downturn, with analysts at Vertical Research projecting a 22% increase in deliveries this year.
Given evidence that omicron, while fast spreading, causes less-severe symptoms than earlier coronavirus variants, some countries are starting to reverse travel curbs put in to slow its spread.
Omicron Challenge
The outbreak could pose a challenge to China’s zero-tolerance Covid policy, Faury said, though he added that the country has shown itself to be adept at dealing with previous waves. It’s too soon to forecast what impact omicron will have on Airbus operations in the country, the CEO said.
China’s huge domestic market has helped its airlines weather the Covid-19 crisis so far. Seat capacity has run above 2019 levels for months at a time during the pandemic, though recent lockdowns have put a lid on the comeback.
Omicron Dogs Airlines as Travel Recovery Remains Elusive
Both Airbus and rival Boeing Co. have grappled with cash-strapped customers seeking delays and cancellations as the pandemic stunts demand. Boeing’s narrow-body deliveries to China have been on hold since 2019 after two fatal crashes, and its own production ramp-up hinges on Chinese regulators’ pending decision to clear the 737 Max for a return.
International travel with China is already on hold. On Friday, the country’s regulator issued a five-year plan suggesting it’s targeting 2023 for a significant expansion in cross-border flying.
Analysts at consultancy OAG predicted in late December that China won’t reopen its borders until at least the end of this year.
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