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Cathay to expand with mid-size craft

Cathay Pacific Airways Ltd plans to buy or lease as many as nine medium-sized passenger aircraft, expanding its fleet to take advantage of increasing demand for air travel.

Cathay is considering Boeing Co's 777-300 and Airbus SAS's A330-300 aircraft, which can seat between 335 and 480 passengers, said corporate development director Tony Tyler in an interview.

The Hong Kong-based carrier wants the planes delivered by 2007.

"We are in discussions with Boeing, Airbus and some leasing companies to discuss the acquisition or leasing of regional aircraft," Tyler said. "These discussions are already well advanced and we'll be able to announce them fairly soon."

Cathay, Singapore Airlines Ltd and other Asian rivals are expanding or upgrading their fleets as passenger traffic recovers from the SARS outbreak last year. The International Air Transport Association has said airlines worldwide may make a combined profit of US$2 billion to US$4 billion this year, compared with losses of over US$30 billion in the last three years.

Hong Kong-based Cathay also expects to complete its purchase of some used Boeing 747-400 planes soon, some of which will be converted into freighters, Tyler said.

"The market price for the 747-400 is falling and Cathay will be able to pick up cheap aircraft," said Jim Eckes, managing director of airline consultancy Indoswiss Aviation. "That's a smart deal and they can then put off the decision on getting the A380."

Toulouse-based Airbus SAS, which last year delivered more planes than Boeing, wants to win more Asian customers for its 550-seat A380 plane, which will compete with Boeing's 747-400 aircraft.

Cathay on Wednesday posted a smaller-than-expected drop in second-half profit as it cut costs, restored flights and ended fare discounts following the containment of the SARS virus. Net income fell 1 percent to HK$2.54 billion (US$326 million).

Travel demand in Asia is improving, with Cathay's bookings for March and April "looking very solid," Tyler said.
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