Chinese airlines in bid for airbuses
By Vicki Kwong and Tian Ying (China Daily)
Updated: 2005-06-17 06:07

Airbus SAS, which got the first Chinese buyer in January for its biggest aircraft, said it is in talks to sell more A380 planes to three Chinese airlines, aiming to deliver them in time for the 2008 Beijing Olympics.

Airbus, the world's biggest maker of commercial aircraft, is in talks to sell an undisclosed number of the 555-seat A380 to Air China Ltd, China Eastern Airlines Corp and Hainan Airlines Co, said Philippe Delmas, Airbus' executive vice president of government relations and communications.

"We are working on getting new customers in China," Delmas said. He declined to say when a sales agreement might be signed with the three buyers.

State-owned airlines of China, the world's fastest-growing major economy, bought 140 aircraft this year valued at US$15.5 billion from Airbus, Boeing Co and Empresa Brasileira de Aeronautica, making the nation the largest market for new planes. China's nine airlines are renewing and expanding their fleets in preparation for the 70 million visitors expected during the 2008 Beijing Olympics and the 2010 Shanghai World Expo.

Chinese airlines may need 1,790 new planes valued at US$230 billion over the next 18 years, according to estimates by Airbus, as the nation's air passenger traffic grows at a pace of 8 per cent a year, faster than the world average of 5.3 per cent. Aeroplane orders for Airbus and Boeing totalled 647 planes last year. The combined total for 2005 was 718 aircraft for the two companies, based on announcements this week. Orders so far at the Paris Air Show totalled 255 planes.

China Southern, with the country's largest fleet, placed a US$1.4 billion order for five A380 planes in January. The A380 will surpass Boeing's 747 as the world's biggest passenger plane when it enters service next year.

Air China, the nation's biggest carrier of overseas travellers, raised HK$9.6 billion (US$1.23 billion) in January from sales of dollar-denominated shares in Hong Kong. The airline is selecting investment banks to sell yuan-denominated shares and was approved to raise 3 billion yuan (US$362 million) in a sale of 10-year local currency bonds.

All this money may go towards the expansion and renewal of the airline's fleet, with 136 planes at the end of June 2004. Air China placed an order in January for 20 Airbus A330-200 planes valued at US$2.9 billion, according to catalogue prices.

Air China is "studying the feasibility" of buying A380s, said its head of investor relations Rao Xinyu.

China Eastern is the nation's third-largest carrier by fleet. The Shanghai-based airline paid US$200 million in March for five Airbus A319 aircraft to use on domestic flights, getting an average 32 per cent discount from catalogue prices.

China Eastern flew 100 aeroplanes by the end of June 2004, according to its annual report. The carrier's previous aircraft purchase was in 2002, when it paid US$800 million for 20 Airbus A320 planes. The A320, with a single aisle between its 150 seats, is used for flying short distances of up to 5,556 kilometres.

Hainan Airlines, owned by US financier George Soros, is China's fourth-biggest airline. The company, based on Hainan Island in southern China, flies a fleet of about 90 planes made by Airbus, Boeing and Germany's Fairchild Dornier GmbH. The airline bought its first Airbus aircraft in December 2003, in a US$440 million order for eight A319 planes.

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