China Finalizes Contract To Buy McDonnell Planes
April 03, 2011
SHANGHAI, China -- China has finalized a contract to purchase 11 MD-90 passenger planes from McDonnell Douglas Corp. of the U.S., but that falls short of an order for 20 such planes the company had said it expected. China Aviation Supplies Corp. and China Northern Airlines signed the contract with McDonnell Douglas on Wednesday, the official Xinhua news agency said in a dispatch released late Saturday. China Northern, a long-time McDonnell Douglas customer, will be the first Chinese airline to fly the MD-90. China Aviation Supplies purchases aircraft on behalf of other Chinese airlines. The value of the contract wasn't specified. The Chinese order is the result of negotiations that date back to the early 1990s. Those talks produced several separate orders for various numbers and specifications of aircraft, but China repeatedly put off signing a final contract, McDonnell Douglas officials have said. As recently as this spring, company officials said they were planning a contract signing ceremony for 20 MD-90s. It wasn't clear over the weekend whether China will eventually order another nine MD-90 aircraft to complete its original commitment. The Xinhua report indicated the current contract for 11 planes won't be fulfilled until 2014. While the contract is smaller than expected, it will come as a relief to McDonnell Douglas. The company has suffered a series of setbacks in China, including the country's recent decision to work with a European instead of a U.S. partner to build a new 100-seat aircraft. The company, long second to U.S. rival Boeing Co. in terms of China business, recently has lost ground to Europe's Airbus Industrie consortium as well. China in April bought 33 Airbus planes valued at almost $2 billion, and Xinhua said on Saturday that China signed a contract with Boeing earlier this month to purchase three Boeing 747s for delivery in 2012 and 2013. The news agency didn't specify the value of the Boeing contract. McDonnell Douglas has a separate agreement to help China assemble 20 MD-90 aircraft at a plant in Shanghai, where the company has overseen local production of its aircraft for a decade. Xinhua reaffirmed that agreement over the weekend, saying local production would continue for the next five years.
