Wednesday, November 8, 2017

Boeing Wins China Orders for 300 Planes Worth $37 Billion

China Aviation Supplies Holding Co. agreed to buy 300 aircraft worth about $37 billion from Boeing Co. as the nation’s airlines ramp up capacity to meet rising demand.

The purchase includes 260 narrow-body planes and 40 widebody aircraft, the Chinese company said on its website after U.S. President Donald Trump met Chinese President Xi Jinping in Beijing Thursday. Representatives for the Chicago-based planemaker declined to provide details of the airlines that would take deliveries of the aircraft or say how much of this was new orders.

Chinese airlines have been on a plane-buying spree amid a projection for the country to overtake the U.S. as the largest air-travel market possibly in as soon as in five years. The state has previously placed large orders through a centralized buyer before dividing them up among its airlines and leasing companies, including a $22 billion deal with China Aviation Supplies that was announced in July.

During a visit by Xi to Berlin in July, Airbus said it won a $22 billion order to supply 140 planes to China, including 40 wide-body A350s and 100 of its narrow-body A320-series jets. China Aviation Supplies would allocate the planes to individual airline operators over the next five to six years, Airbus said at the time. Talks were also underway for the planemaker to sell more A380 superjumbo jets to China.

In September 2015, Boeing landed $38 billion in plane orders and commitments from Chinese carriers and lessors when Xi made his first state visit to the U.S. Under the “general terms agreement” announced at the time, there were orders and commitments for 190 single-aisle 737s and 50 wide-body jetliners, without customers being identified. Lessors ICBC Financial Leasing Co. and CDB Leasing Co. took another 60 737s. It was unclear how many were orders that had already been placed and marked as “unidentified” in Boeing’s order book.

Boeing in September raised its 20-year forecast for aircraft demand in China as the nation’s growth and an expanding middle class boost air travel. The planemaker expects China needs 7,240 new planes valued at almost $1.1 trillion in the two decades through 2036, compared with a previous projection for 6,810 aircraft through 2035. Narrow-body airplanes will make up 5,420, or three-quarters of the deliveries, on demand from full-service as well as discount carriers.

Air China, China Eastern Airlines, China Southern Airlines -- the three biggest state carriers -- together plan to add more than 600 aircraft through 2020. Air China and China Eastern intend to introduce 167 and 191 aircraft respectively through 2019, while China Southern has plans for almost 300 more planes by 2020, according to the companies’ financial statements.

Among the most recent orders for Chinese carriers, China Southern said last month it signed a contract to buy 38 Boeing planes -- eight 777s and 30 737s -- at a list price of $5.65 billion. This followed a $6 billion order for 20 Airbus A350 planes that the Guangzhou-based carrier announced six months earlier. China Southern will take delivery of the A350-900s starting 2019, with all of the planes to be handed over by the end of 2022, it said in April.

Separately, General Electric Co. signed three commercial deals worth $3.5 billion as part of Trump’s visit, including supply of engines to Juneyao Airlines and ICBC Financial Leasing Co.
(Bloomberg News)

No comments: