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...
Global Fleet Outlook: Deliveries peak, as order highs decline.
Airlines are set to add more new aircraft than ever before in 2017. After years of record ordering and building backlogs, aircraft manufacturers are making good on their promises to ramp up production. The industry is enjoying record levels of growth and profitability; with solid passenger market fundamentals, and both airlines and leasing companies having access to ready liquidity, cheap debt and plentiful equity capital, making financing fleet orders easier than at any time before the global financial crisis.
Southwest Airlines and jetBlue take different paths to sustaining balance sheet strength
At nearly 46 years old and 17 years old, respectively, Southwest and jetBlue approach their financial priorities differently. jetBlue is in the process of buying a certain level of aircraft off lease to reduce debt and raise its levels of unencumbered aircraft. Southwest is concluding a hefty investment in a long overdue overhaul of its reservations system and making other significant technology investments.
Each airline also has a different capital allocation strategy. Southwest has engaged in some level of shareholder returns since the 1990s, whereas jetBlue’s shareholder return strategy is just starting to take shape – the airline is reaching a point in its leverage performance where it can contemplate more meaningful levels of shareholder returns in the medium term.
One area where Southwest and jetBlue hold similar visions is balance sheet strength, and the airlines have similar leverage goals: to support capex commitments, maintain manageable debt levels, and expand or sustain return to shareholders.