Airline News
Mainland Digest: China’s airlines ramp up international expansion
July 20th 2015
The Mainland’s “Big Three” are maintaining their growth strategy with announcements they have applied for new traffic rights to Europe and the U.S. Air China filed for a four-weekly Chengdu-Paris A330 schedule and China Southern Airlines sought permission to operate daily from Pudong to Chicago with B777-300ERs, both from October 25. Read More » As previously reported, China Eastern Airlines last month launched a Chengdu-Nanjing-Los Angeles rotation, while Air China, in early July, said it would start a four times a week Beijing-Newark B777-300ER service from October.
To fuel growth and reduce operating costs, the Chinese carriers introduced 158 aircraft into their fleets in the first-half 2015 - 24 wide bodies and 134 narrow bodies. China Eastern took delivery of 28 aircraft, China Southern introduced 22, Air China received 17 and Hainan Airlines took 16 from January to July. Profits for China's carriers reached a historic high in the first half of 2015, said Li Jiaxiang, chief of the Civil Aviation Administration of China (CAAC) at his mid-year teleconference in Beijing earlier this month and added their first-half profits had already surpassed the results for the 2014 year. China Eastern last week estimated it would report a net profit ranging from 3.5 billion to 3.7 billion yuan ($560million - $600 million) for the first six months, up 249% year-on-year. China Southern said it expected a net profit of 3.4 billion to 3.6 billion yuan for the first half ended June 30, sharply reversing a year-ago loss.
The Guangzhou-based airline last week agreed to acquire an additional 4% equity in Xiamen Airlines from Xiamen C&D Inc. for 586 million yuan ($94 million), which increased its stake in the Fujian carrier from 51% to 55%. The remaining 45% will be held by Xiamen C&D (34%) and Fujian I&D Group (11%). At press time, Xiamen had 115 aircraft; 104 B737NGs, six B757s and five B787-8s. In the first quarter of 2015, it reported a net profit of 308 million yuan.
Separately, Bohai Leasing, a unit of the HNA Group, has announced it had agreed to acquire 20% of Dublin-based lessor, Avolon Holdings Ltd, for $429 million. “The directors of both Avolon and Bohai unanimously support the transaction and believe this strategic investment by Bohai will deliver long-term value for shareholders in both companies,” the companies said when the deal was announced. Bohai chief, Chris Jin, said the Avolon stake would expand his company’s leasing activities and geographic reach. Avolon will benefit from strengthened links in China, which the lessor’s chairman, Denis Nayden, described as “one of the most compelling growth opportunities in global aviation over the next two decades”. At press time, Avolon has 56 customers in 33 countries for its aircraft portfolio.
