Cathay Pacific Airways is ordering 27 new Airbus and Boeing jets to expand services, especially in Asia, and says profit tripled last year to a record.
Hong Kong’s biggest airline said yesterday it signed a deal with Airbus SAS for 15 A330-300 airplanes and another with Boeing Co for 10 777-300ER jets. Cathay has also agreed to lease two Airbus A350-900s from International Lease Finance Corp — adding this jet to its fleet for the first time.
The airline said the 27 jets are worth HK$51 billion (US$6.5 billion) at sticker prices, but it’s getting a big discount, a common practice in such deals.
The new jets will allow Cathay to continue expanding its passenger routes as well as help the airline save on fuel, its biggest cost, by retiring older, thirstier jets.
Cathay’s Airbus A330-300s are primarily used on routes within Asia, while its Boeing 777-300ER jets are mainly used on long-haul routes. All will be delivered by the end of 2015.
The announcement follows the airline’s biggest ever order announced in September, for 36 aircraft, including 30 from Airbus and six from Boeing.
The airline is in talks to buy 14 more aircraft, but did not give any more details.
Cathay also said that earnings last year tripled to a record HK$14.05 billion from HK$4.69 billion in 2009.
The airline credited a recovery from the global financial crisis that began in the second half of 2009 for helping both passenger and cargo businesses.
“The momentum was sustained throughout 2010,” a Cathay statement said.
The announcement underscores how surging Asian economic growth is spurring demand for air travel.
Both Airbus and Boeing predict that Asia will overtake North America and Europe as the world’s biggest air transport market and account for a third of global aircraft demand over the next 20 years.
Cathay’s order follows others from Chinese airlines announced on Tuesday at an air show in Hong Kong.
China’s HNA Group (中國海航集團) said that the two airlines it operates are buying 38 Boeing jets, and five each from Gulfstream and Dassault Falcon.
Air China Ltd (中國國際航空), which is the country’s biggest airline and owns 30 percent of Cathay, said it’s buying five Boeing 747-8 Intercontinental passenger jets worth a list price of about US$1.5 billion, a move which would be a boost for the slow-selling superjumbo jet.
Later on Tuesday ILFC, the world’s biggest plane leasing company, placed an order for 33 Boeing 737-800s and 100 revamped narrowbodies from the A320neo family.
Boeing now has half of China’s market share, with the rest mainly supplied by Airbus. Asia-Pacific demand for aircraft will likely form a significant portion of the demand from global airlines, which Boeing said would need 30,900 new passenger and freighter aircraft by 2030, valued at US$3.6 trillion.
In the short term, however, the industry’s outlook will also be clouded by uncertainties in the global economy.
“This year will be a bit slower than last year, the reason being that most of the near-term production capacity that we have available has already been sold,” said Marlin Dailey, Boeing’s executive vice president of sales and marketing commercial airplanes.
“And so airlines are going to slow down a bit before they make those decisions because they are talking about airplane availability in the 2014/15 time frame,” Dailey said.
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