Sat, Apr 30, 2016 - Page 15 News List

China Eastern Airlines to buy Airbus, Boeing planes

ORDER SPLIT:The Shanghai-based airline is to spend US$6 billion on 20 A350 planes and US$4 billion on 15 Boeing Dreamliners to bolster its passenger fleet


One of China’s top airlines will split US$10 billion of new orders between European manufacturer Airbus Group SE and US-based Boeing Co, it said, as competition heats up for aviation market share in the world’s second-largest economy.

China Eastern Airlines Corp (中國東方航空) said in a statement to the Hong Kong stock exchange that the lion’s share of the orders, nearly US$6 billion, will go to Airbus for 20 A350 aircraft.

It will also spend close to US$4 billion on 15 Boeing 787-9 Dreamliners.

The bitter aerospace rivals have been in a fierce battle for orders in China, which is forecast to have 1.7 billion air passengers by 2034, and is poised to become the largest civil aviation market in the world in the next two decades.

China Eastern is one of China’s top three airlines, operating 560 aircraft and carrying about 100 million passengers annually.

The Shanghai-headquartered company plans to use the long-haul planes for travel between China, North America and Europe, and to replace retired aircraft.

They were intended to build “a streamlined and efficient, well-constructed and industry-leading passenger aircraft fleet,” it said, and “provide vast amount of passengers with more comfortable on-board services.”

China is now Airbus’ largest market, accounting for nearly one-quarter of the planes it delivered last year. Last month, the company started construction on a new US$150 million facility in the port city of Tianjin, China, to deliver wide-body planes in the country.

Airbus says it has gone from 27 percent market share in the country in 2004 to about 50 percent today.

Boeing also plans to open a completion center in China, it announced last year.

The company sold 300 aircraft worth a record US$38 billion during Chinese President Xi Jinping’s (習近平) visit to the US last year.

The China Eastern orders come a day after Boeing reported an 8.8 percent fall in first-quarter earnings to US$1.2 billion, partly due to sluggish aircraft deliveries into a slowing global economy.

However, China hopes some of the massive civil aircraft market will go to its homegrown planes.

State-owned Commercial Aircraft Corp of China (COMAC, 中國商用飛機) has already delivered its first domestically made regional jet, and rolled out a narrow-body C919 plane in November last year.

In the long term, COMAC aims to produce an even larger wide-body jet in cooperation with Russia’s United Aircraft Corp, whose products include the Sukhoi Superjet 100.

China Eastern’s announcement late on Thursday came alongside its first-quarter results, in which it said net profits rose 66.4 percent year-on-year to 2.6 billion yuan (US$400 million).

“China Eastern bought the wide-body aircraft mainly to invest in its international routes as outbound travel is quite hot and the gross profit margins for international flights are much higher than domestic ones,” Sinolink Securities Co (國金證券) analyst Dai Yaxiong said.

Falling fuel prices were the main driver of the rise in profits, he said, adding: “The demand for civil aviation was also quite stable.”

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