(Bloomberg) -- Airbus 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 manufacturer is closely watching the situation in China, the destination for 23% of aircraft handovers in 2021, Faury said. With the Winter Olympics in Beijing just a month away, the country has imposed increasingly strict, though localized, lockdown measures that had already failed to contain the less-contagious delta variant of the coronavirus. 

The moves 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 following annual order-and-delivery results. 

“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.”

Travel Comeback

On the demand side, 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

While aircraft contracts are generally hard to break, both Airbus and rival Boeing Co. have seen cancellations with customers worldwide as the pandemic wreaks havoc on airline finances. Boeing has less at stake for now, as narrow-body deliveries to China have been on hold since 2019. The 737 Max is awaiting recertification in the country.

International travel is already on hold. On Friday, China’s regulator issued a five-year plan suggesting it doesn’t expect cross-border flying to return in significant numbers until 2023, Reuters reported. This is in line with the expectations of some analysts, with consultancy OAG predicting in late December that China won’t reopen its borders until at least the end of this year. 

The outbreak could pose a challenge to China’s zero-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, he said. 

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