It is reported that not only China Southern Airlines , but also Air China and Shenzhen Airlines will purchase Airbus A320NEO.
On the evening of July 1, Air China Co., Ltd. ( Air China , 601111.SH) announced that it signed an Air China purchase agreement on July 1 to purchase 64 Airbus A320NEO series aircraft from Airbus Company . The company's holding subsidiary Shenzhen Airlines purchased 32 Airbus A320NEO series aircraft from Airbus.
announced that the basic price of each aircraft includes the price of the fuselage, additional parts and engines. The total basic price of the aforementioned 96 Airbus A320NEO aircraft is approximately US$12.213 billion (price in January 2020). The aircraft price needs to be adjusted according to the formula. Airbus has given the company and Shenzhen Airlines a larger price discount in the form of a credit memorandum. The credit memorandum was determined after fair negotiations between the parties to the agreement. The company and Shenzhen Airlines can use the credit memorandum to pay Airbus Final payment for aircraft , or purchase of Airbus products and services. Therefore, the actual consideration for this transaction is lower than the aforementioned basic price of the aircraft.
In terms of payment and delivery, the consideration for this transaction will be paid in cash in installments. In this transaction, the aforementioned aircraft planned to be purchased by Air China are planned to be delivered in batches from 2023 to 2027; the aforementioned aircraft planned to be purchased by Shenzhen Airlines are planned to be delivered in batches from 2024 to 2026.
Regarding the source of transaction funds, Air China and Shenzhen Airlines will provide funds for this transaction with their own funds, commercial bank loans and other financing methods respectively. The company does not expect that this transaction will have any significant impact on 's cash flow or 's business operations.
Regarding the reasons and benefits of this transaction, the announcement stated that this transaction will expand the carrying capacity of the group's fleet, without considering adjustments such as aircraft withdrawals that may be made to the fleet based on market environment and aircraft age. In terms of available ton-kilometers as of December 31, 2021, this transaction will increase the Group's shipping capacity by approximately 10.4%. The introduction of new aircraft will be concentrated after 2024, partly to meet the replacement needs of the old aircraft in the fleet, and the actual net increase rate will remain within a controllable range. The Group expects that this transaction will make the Group's operating costs more competitive in the market, while also helping to provide passengers with high-level safety and comfort services.
As of the close of trading on July 1, Air China reported 11.1 yuan, down 4.39%, and up 21.58% year-to-date.
There are currently several points worthy of attention:
1. What is certain is that for such a large order, FGW should take the lead and distribute the order to three airlines. This plan should have been discussed and finalized and submitted for approval at least one or two years ago. After a long period of negotiations and related processes, it was possible to sign the contract and release the news in the near future. Christian Scherer, Chief Commercial Officer and Head of International at Airbus , said: “We commend George Xu and the entire Airbus China team, as well as our customer teams, for the excellent work they have done to end the difficult COVID-19 pandemic. The long-term and extensive discussion also supports this point. Therefore, it can be said with certainty that this batch of orders has nothing to do with the recent international situation or even the recent year.
2. All orders in this batch will be delivered between 2024 and 2027. The airline also pointed out that these orders are to replace and modernize existing aircraft, as well as "complement future capacity" growth. Does it mean that air passenger transport will rebound significantly in the next few years in the post-COVID era? In the current environment, it is at least very meaningful to boost economic confidence.
3. Of course, the timing of the announcement is worth pondering.
It is customary for large orders like this to be linked to visits by dignitaries or other major events. Besides, the Farnborough Air Show is about to be held in London. Perhaps due to the current COVID situation, it is difficult for airline executives and others who should be in attendance to attend?
In addition, today is the anniversary of Hong Kong's return to the motherland. Politicians in some countries are still making nonsense and choosing to release blockbuster news at this time, which is really thought-provoking.Baoqi is attacking the United States, Britain, Australia, and its Hong Kong agents. Erwuzi Cathay Pacific will of course suffer a collateral blow.
Also of greater relevance is Airbus’s announcement last week of the development of the Airbus China Research Center located in Suzhou . This is very imaginative. Is it possible for the Jiangsu-Hangzhou Yangtze River Delta region to develop a high-tech talent base for the aviation industry?
4. The delivery of approximately 300 new aircraft within four years will pose great challenges and opportunities to the Airbus Tianjin assembly plant. The Tianjin assembly plant is undertaken by Xifei and completes the installation and testing of relevant system components based on the fuselage structure. This will have a significant impact on industrial agglomeration and the development of aviation manufacturing, aviation maintenance, aviation logistics and aviation services. Of course, the most important thing is to cultivate a large number of industrial talents for XAC and further lay the foundation for domestically produced large aircraft.
5. As mentioned before, and were shut out of the plan launched one or two years ago. Of course, there are safety accident factors. The successive crashes have made Chinese people lose confidence in Boeing. At the same time, Sino-US relations must be the most important factor.
In fact, aside from personal considerations such as obtaining evidence for C919 and pleasing EU relations, these 292 Airbus 320NEOs are obviously the most reasonable choice for Chinese airlines to update their narrow-body fleet before the C919 enters large-scale service. Although the three major domestic airlines cannot be said to be very good in terms of service and details, they have indeed been at the forefront of the world in updating their fleets. Therefore, when facing a large number of 737NG and 320CEO that have been in service for more than ten years, these two hundred Amortizing multiple orders does not seem to be a lot, and it can really save a lot of maintenance and operating expenses in the future! The 737 is really old. Even if it returns to flight smoothly, the product of the 737MAX is indeed better than the 320NEO. It is not very good at flying, so now it is almost the general trend that the 320NEO is killing everyone. It is a pity that there is no 321NEO in this order, otherwise domestic passengers can also experience the "thrill" of a narrow-body aircraft flying intercontinental routes! Now In the narrow-body aircraft market, Airbus hopes to become the dominant player in the next few years if it works hard. When Boeing will release NMA has become the key to hegemony. If the C919 really wants to become a tripartite existence, then it will be better to make a decision before NMA comes out. Due to the time difference, it is particularly important to accumulate some reputation in the past few years! This is actually somewhat helpless and somewhat forced. Of course, there are also long-term considerations that everyone knows. Being able to make friends through business is the essence of diplomacy!
United States Gathering "loyal lackeys" Australia, Japan, the United Kingdom and Canada to create anti-China issues at G7 and NATO summits, in an attempt to coerce EU countries into building a network to encircle China. France and Germany have shown a certain degree of independence under the noisy anti-China clamor of the " Five Eyes Alliance ". China will naturally reciprocate and "reward" Airbus orders. The largest shareholders of Airbus are France and Germany, which have tied their economic interests to those of the European Union, disrupting the United States' attempt to coerce its allies into confronting China.
