The Coronavirus has indeed affected a huge part of Chinese economy. While health of global citizens is a primary concern, because of which, the World Health Organization (WHO) has declared a global health emergency, the impact of the epidemic on business, and particularly, aviation, has been gargantuan. As per a recent report, Airbus has closed its aircraft production facility in Tianjin, near the Chinese capital Beijing.
Last week, Airbus said in a statement:
“China domestic and worldwide travel restrictions are posing some logistical challenges. The Tianjin Final Assembly Line facility is currently closed.”
The Tianjin facility, the first of its kind for Airbus outside Europe, is a completion centre for single-aisle A320ceo and A320neo series aircraft and is capable enough to handle the larger A330 aircraft.
Airbus Plant in Tianjin, China. Image Credits: Airbus
Airbus has not mentioned when the centre might reopen. A Press Release by Airbus last week can be seen as below:
In 2019, Chinese lessors and airlines accounted for $10.2B worth of business with Airbus’s commercial aircraft segment, meaning that China accounts for over 15% of the commercial aircraft business for Airbus. With the Chinese commercial aviation segment suffering heavilty due to the epidemic, closing of the production centre in Tianjin is an added blow for Airbus. The facility was already closed for the Chinese New Year, but that has now been extended possibly affecting Airbus’s full year production. The facility in China is not the biggest facility location, but it certainly is an important one, accounting for $3.6b of Airbus’ annual manufacturing business.
The longer the coronavirus stays around, the bigger financial impact it will have. While tourism and travel industry in Asia have suffered substantially already, its impact on business is expected to linger for months to come. The unique setup of China – being a huge consumer market and the industrial estate of the world – makes the consequences of virus outbreak even more severe.
So, how serious is this issue for Airbus? Keep in mind that even Boeing has presence in China, however, it is only a strategic investment to boost sales, while Airbus has a whole production line! So, Boeing might not be as affected as Airbus in this case. With the corruption scandal costing them billions, this is surely a big blow for Airbus. What do you think, will the closing of Tianjin plant, and loss of business thereby affect Airbus largely? Let us know in the comments!