Boeing Wins Big in China

Hong Kong Airlines and Air China purchases worth $10 billion

Boeing scored multi-billion-dollar deals with China-based airlines on March 8 in a boost to both its next-generation jumbo jet and to its troubled Dreamliner program. Boeing said that Hong Kong Airlines, which currently has just 18 aircraft servicing routes to Asia and to Russia, had placed a preliminary order for 38 planes worth up to $8.5 billion at list prices.

Air China, the state-owned flag carrier, said it had agreed to buy five of Boeing's new 747-8 Intercontinental jets, becoming the third airline to order the stretched passenger jumbo after Lufthansa and Korean Air.

The US company said that 10-year-old Hong Kong Airlines planned to expand its small fleet with the purchase of 30 787-9s, six 777 Freighters and two 787-8 VIP planes.

"We time it pretty much in line with the natural replacement cycle for the 747-400," Marlin Dailey, Boeing's executive vice president for sales and marketing of commercial airplanes, said at a signing ceremony with Air China at the Asian Aerospace 2011 trade show in Hong Kong.

Both the 747-8 and the long-haul 787 Dreamliner are powered by the same energy-efficient General Electric engine, and Boeing is banking on plenty of orders from airlines keen to lower their sky-high fuel bills as it does battle with Airbus's giant A380.

"Boeing's family of technologically advanced, long-haul airplanes will enhance Hong Kong Airlines ability to match the demands of the different markets it serves, and connect its long-haul network to local sources of demand," a Boeing statement said.

Privately owned Hong Kong Airlines is a unit of Chinese tourism and aviation conglomerate HNA Group, which also owns Hainan Airlines. Boeing said it would make a follow-up announcement once the deal is finalized.

The combined list price for Air China's new order was $1.54 billion, but the carrier said that Boeing had granted "significant price concessions", without disclosing what it is actually paying.

The Dreamliner was heralded as a new generation of fuel-sipping mid-sized plane, but has been plagued by delays owing to Boeing's use of composite materials and to its problems in integrating production at various sites.

The 747-8 is nearly six meters (20 feet) longer than the 747-400, the current incarnation of a model that has been in service since 1970 and was the largest passenger plane until the double-decker A380 began operations in 2007.

Boeing unveiled the Intercontinental, the passenger version of the 747-8 family, only last month. First delivery of the jumbo jet is scheduled for the fourth quarter of this year. It will seat 467 passengers in a typical three-class configuration, up from 416 in an older version but less than the 550 for a typical Airbus A380. It also offers 26% more cargo volume than the 747-400.

Air China said it would operate the 747-8s on high-capacity routes to North America, and said it was not ruling out further orders for the new jumbo. "Our fleet isn't sufficient to cope with our expansion plans so we will continue to expand our fleet size," said Zhang Yang, Air China's general manager for strategy and development.

China plans to invest more than 1.5 trillion yuan ($230 billion) in its aviation industry over the next five years to meet surging demand, Li Jiaxiang, head of the Civil Aviation Administration of China, said last month. The country aims to expand its aircraft fleet to more than 4,500 planes by 2015 from over 2,600 at present and increase its number of commercial airports to 220 from the current 175.

China Southern Airlines, the country's biggest airline by fleet size, is the only Chinese carrier to have purchased A380s. It has five on order, the first of which is to be delivered this year.

Copyright Agence France-Presse, 2011

See Also
Boeing 2010 Earnings Soar 152%

Boeing Orders Rise 31% Despite Dreamliner Woes

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