Asian airlines in race to expand fleets
Asian airlines in race to expand fleets
SINGAPORE (Reuter): Major Asian airlines are competing to expand their fleets with a rash of orders for Boeing Co and Airbus Industrie aircraft worth about US$20 billion, airline officials and analysts said yesterday.
Singapore Airlines (SIA) -- which announced its largest order for 77 Boeing planes last month -- and other major Asian airlines were favorably placed to gain from fast passenger traffic growth in the region which outstripped traffic growth elsewhere in the world, analysts in Singapore said.
By 2010, 50 percent of the world's air traffic would be from, to, or within the Asia-Pacific region, an SIA official said.
Airline officials and analysts in Singapore, Taiwan, Japan, the Philippines, Malaysia and India told Reuters of plans to expand the region's fleets.
Malaysian Airline System Bhd (MAS) was expected to announce purchase deals worth about 10 billion ringgit (US$4 billion) in early January, company officials said.
In Manila, the $3 billion fleet expansion program of Philippine Airlines (PAL) was to make it more competitive with other carriers in the region, officials and analysts said.
A PAL official said on Thursday his company was finalizing plans to order eight more Boeing 747-400 and 24 various Airbus jets as part of its reflecting program.
He said shareholders planned to inject an additional five billion pesos (US$190.7 million) in capital and to get financing support from the U.S. Import Export Bank and export credit agencies in Europe for its expansion.
Joven Babaan, an analyst at SCB Warburg in Manila said "The fleet expansion of PAL is an act of survival."
Last month, SIA announced its largest-ever order of $12.7 billion for 77 new Boeing 777-200 medium-range planes, of which 34 were firm orders and 43 were on option. The planes would be delivered between 1997 and 2004.
"We have no plans to order more aircraft in the near future," Rick Clements, SIA's senior manager for public affairs, told Reuters on Friday.
"Eventually, we may require a smaller-capacity aircraft (with about 200 seats) to operate on regional routes," he said.
Mathew Samuel, SIA's director of corporate affairs, told Reuters last month the latest order and last year's $10.3 billion order for 52 long-haul planes from Boeing and Airbus were not enough to meet SIA's projected 8-10 percent annual capacity growth.
SIA has aggressively pursued its fleet expansion program since 1990 to keep its aircraft young, with an average age of five years and nine months, against the industry's average of well over 10 years. The fleet has grown from 37 in 1989 to 70 at present.
One of the biggest markets in Asia will be China. Boeing officials said in Beijing earlier this month the company aimed to have 2,300 of its planes flying across China's skies by 2010 from the present 243 and it was expanding its spare parts inventory to support rising demand for its aircraft.
Across the region, Airbus has said Asia would need more than 3,800 planes in the over 70-seat category by 2014. With about 400 aircraft already on order, this left a future market for 3,400 planes worth US$340 billion at their present value.
Japan's All Nippon Airways Co Ltd (ANA) said in September it signed a purchase contract with Boeing to buy 10 777-300 aircraft for 130 billion yen (US$1.26 billion).
In October, Japan Airlines Co Ltd (JAL) said it had decided to order five Boeing 777-300s for a total of about 80 billion yen (US$$778 million), including the cost of the engines.
Last month, Japan Asia Airways Co, a unit of JAL, said it was considering Boeing 767s to replace McDonnell Douglas DC-10s that it now uses, but had not decided whether it would buy the new planes or lease them from JAL.
As part of its fleet expansion, the Malaysian carrier MAS announced plans to buy 25 medium-range and long-range aircraft. The planes would be delivered between 1998 and 2000.
In Taiwan, China Airlines announced last week it would buy six Boeing 737-800 planes and had an option to buy a further nine. The total cost of the 15 aircraft was estimated at US$750 million, the company said.
The airline said it would purchase the first six between August and November, 1998, and it might exercise its option to buy some or all of the further nine 737-800s between 1999 and 2000.