Adam Berry, Getty Images
Airbus COO and CCO John Leahy shows off a model of an A320 during the 2012 Internationale Luftausstellung Air Show in Berlin.

Airbus Picks Up $2 Billion Contract with Chinese Spring Airlines

July 21, 2015
The order, which calls for 21 Airbus A320 planes, helped the Chinese budget airline reverse a morning stock plunge, and should increase the company's presence in the skies in the coming years.

SHANGHAI — Chinese budget carrier Spring Airlines said it plans to purchase 21 Airbus A320 planes for 12.45 billion yuan ($2.01 billion), citing growth in both international and domestic air travel.

The Shanghai-listed company intends to fund the purchase in part through a private placement of shares to raise 4.5 billion yuan ($724.69 million), according to a statement to the exchange late Monday. The single-aisle A320 has a list price of $97 million, according to Airbus.

"Demand in China's domestic and international aviation market is steadily increasing," Spring said in the statement. "The company intends to reasonably expand the scale of its fleet to increase its air transport capacity."

Spring Airlines, headquartered in the Chinese commercial hub of Shanghai, was founded in 2005 and now flies more than 90 domestic and international routes, according to its website. Its shares, which had been suspended since June 26 owing to a rout on China's stock market, closed up 3.21% on Tuesday, reversing a 10% plunge in early trading. The company's net profit for the first quarter this year jumped 46.43% year-on-year to 254.32 million yuan ($40.96 million).

China, the world's second-largest economy, is already Asia's biggest aircraft buyer as a growing middle class takes to the skies in ever-increasing numbers.

Last year, U.S. aircraft giant Boeing forecast that Chinese carriers will need nearly 6,000 new planes valued at $780 billion over the next 20 years, accounting for around 16% of world demand and nearly half of Asia's.

But China hopes part of its vast aircraft market will go to a homegrown passenger plane — the 168-seat C919 — in a challenge to the global dominance of Boeing and Airbus.

Chinese economic growth is also slowing and expected to soften further in coming years — a trend industry officials say could put a dent in air travel.

China's gross domestic product expanded 7.4% last year, the slowest since 1990. The country's GDP grew 7.0% year-on-year in the second quarter, matching the 7.0% expansion in the first three months of this year.

Copyright Agence France-Presse, 2015

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