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Air China interested in mergers; Boeing and Airbus see the importance of the Indian aviation market

5-Mar-2010

Air China Chairman, Kong Dong, stated the carrier is interested in mergers and acquisitions in both the domestic and international market, with the carrier confirming its intention to acquire Shenzhen Airlines - China's fifth largest carrier - as part of efforts to build its strategic network and presence in the Pearl River Delta to compete with Guangzhou-based China Southern Airlines, the nation’s largest carrier.

Mr Kong added that carrier's financial performance in 2010 is expected to improve from 2009 levels, although no earnings estimates were provided. The carrier, which returned to profitability in 3Q2009 due to fuel hedging gains and a strong domestic traffic recovery, told Reuters it would focus on its cargo business to improve its financial results

Air China, meanwhile, stated its H shares continue to be suspended as its controlling shareholder, China National Aviation Holding Company, contemplates the injection into the company of the state-owned capital operation budget that it has received. Air China is currently considering the arrangement in relation to potential private placements of its shares.

Boeing and Airbus emphasise the importance of the Indian aviation market

In the Indian market, Airbus and Boeing, at India Aviation 2010 Air Show, separately outlined the importance of the Indian market over the next 20 years, with Airbus India VP Sales, Miranda Mills, commented that “long term, the potential for growth in India’s aviation sector remains exceptional”.

Boeing and Airbus forecasts for the Indian market: Indian Aviation 2010 Air Show

 

Boeing

Airbus

Traffic growth

Expects India’s civil aviation sector to grow 10% in 2010 to 48 million passengers.

Expects traffic to increase by an average of 12.2% p/a over the next ten years, to be the fastest growing market worldwide, while traffic growth over the next 20 years is forecast at 7.3%, compared to the global average of 4.7%.

Aircraft requirements

Forecast to require approximately 1,000 aircraft (worth USD100 billion) over the next 20 years, of which 77% are expected to be single-aisle aircraft, with Boeing stated it does “not think India will require many large aircraft”.  Accordingly, Boeing expects India’s fleet will rise from 330 in 2008 to 1,290 by 2028.

India’s total aircraft market is expected to grow fourfold by 2028, with India carriers requiring 1,032 aircraft (worth USD138 billion). The total number of aircraft comprises 993 passenger (638 single-aisle, 287 twin-aisle and 68 large aircraft) and 39 freighter aircraft. The passenger market would also increase fourfold to a total of 1,163 aircraft by 2028, while the freighter market would grow 20 times to a total of 210 aircraft, including 171 passenger aircraft conversions. The manufactuer added that it expects India to account for approximately 10% of Airbus’ global commercial aircraft revenue in four to five years, up from the current 6-7%.

Orders

Current orders from Indian carriers are 85, worth USD14 billion, including 27 B787s for Air India (first delivery due in 2Q201), and ten B787s for Jet Airways.

Expects fresh orders from Indian carriers by 2012. During 2009, Airbus delivered 27 aircraft to India, including 17 to Air India, six to IndiGo and four to GoAir. The manufacturer added that it is currently in talks with a number of Indian carriers and expects to receive new aircraft orders from 2011.

Kingfisher Airlines’ shares gained 0.5% yesterday, as ULJK Securities stated Kingfisher is “looking pretty strong on the technical charts”, adding that Kingfisher shares are a “good buy”. ULJK added that it has a short-term target price on the carrier’s shares of INR57.50 and INR58, compared to the current level of around INR53.50.

ULJK added that “Jet Airways has gone up considerably”, but added, “I don’t think it is a good buy at this level”. In other Jet Airways news, the airline’s Chairman, Naresh Goyal, stated 2010 “will be better” than 2009, as the Indian carriers have all been rationalising their capacity. Shares in Jet Airways slipped 1.7% yesterday, while SpiceJet was also weaker, down 2.1%.

For this and more coverage of the region’s aviation updates, subscribe to Asia Pacific Airline Daily. Other highlights in today’s edition include:

Asia Pacific selected airlines daily share price movements (% change): 04-Mar-2010


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