China Eastern Airlines placed (23-Nov-2012) an order for 60 A320 aircraft from Airbus, worth USD5.4 billion at list prices (although the carrier said it received a "substantial" discount on this list price). The carrier expects to take delivery of the aircraft in stages between 2014-2017, with the purchase to be funded through working capital, commercial bank loans and other sources. "The Airbus aircraft will primarily be used to satisfy the increasing demand for domestic medium and short-haul passenger air transportation routes," the airline said, adding: "The purchase of the Airbus aircraft will further strengthen the company's competitiveness in the domestic civil aviation market and increase its operational capacity in domestic routes of the company." The deal is subject to shareholder and regulatory approvals. China Eastern Airlines also said it has agreed to sell 18 regional jets, including 10 Embraer and eight Canadair aircraft, to Airbus as part of efforts to streamline its fleet. The 18 jets, valued at CNY1.54 billion (USD247 million), have an average usage of around 8.2 years. They will be delivered to Airbus from 2014 to 2016. "The disposal of the regional jets will streamline the aircraft models operated by the company, optimise the fleet structure of the company and lower the unit operation costs of the company," China Eastern Airlines said. [more - original PR] [more - original PR - II]
China Eastern Airlines to acquire 60 A320 aircraft, divest eight Canadair and 10 Embraer aircraft
You may also be interested in the following articles...
United Airlines Part 2: Sustaining balance sheet strength while declaring ambitious margin targets
One area where United Airlines has made important strides during the last few years is in overhauling its balance sheet. Its efforts have gained some recognition from credit agencies for its progress in paring down debt and improving leverage ratios; but similarly to its rival American Airlines – attaining an investment-grade credit rating is not a huge priority for United. The airline believes it can achieve some benefits that investment-grade companies enjoy with the current state of its balance sheet.
In order to sustain the progress it has made in balance sheet repair United plans to amend its aircraft order book to slash capex commitments during the next couple of years, including the deferral of 61 Boeing narrowbodies. United is hinting that other fleet changes could be under consideration, including deals similar to the agreement it forged during 2015 to lease used Airbus A319s.
This is Part 2 in a two-part series reviewing United’s financial and revenue-generating opportunities.
China Southern Airlines deflects yield pressure concerns. Long haul focus shifts to North America
China Southern Airlines may be Asia's largest airline, but it has one of the smallest long haul networks. China Southern has shifted growth to international markets, which represented only 17% of capacity in 2009 but doubled to 34% in 2016. Its long haul plank has been Australia and New Zealand, funnelling traffic from around China down to its southern hub at Guangzhou. China Southern has met its objectives for Australia/NZ and now turns its focus to the market that has preoccupied most other Northeast Asian airlines: North America.
China Southern plans to increase flights from five daily to 11 daily, about the size that ANA is today – and larger than Air China and China Eastern. Although China Southern can build on the principle of using Guangzhou as a North-South hub, North America is a radically different proposition. Guangzhou's southern positioning limits exposure to the Chinese market that China Southern knows best. China Southern will need to target connections to Southeast Asia and India, which have only been a small component of Air China and China Eastern's network.