China Southern Airlines to Buy 80 Aircraft from Airbus

By Joanne Chiu 

HONG KONG-- China Southern Airlines Co. signed an agreement to buy a total of 80 passenger aircraft from Franco-German Airbus Group NV with a combined list price of up to $9.33 billion, as it seeks to expand capacity and improve efficiency.

The Guangzhou-based carrier said Friday in a statement that it ordered 30 Airbus 320 series aircraft and 50 Airbus 320NEO series aircraft, which are scheduled to start delivery in 2016.

The latest aircraft purchase comes as Chinese airlines continues to expand their aviation network to cope with the nation's rapidly growing air travel demand, while at the same time speeding up retirement of older and less fuel-efficient aircraft to reduce operating cost. In February, small rival China Eastern Airlines Corp. made an order to buy 70 Airbus A320NEO aircraft with a list price of $6.37 billion, as it seeks to boost capacity.

China Southern didn't disclose the purchase prices but said the actual consideration for aircraft is significantly lower than the list price as Airbus had granted it "significant price concessions." Airlines usually receive discounts for large orders.

Once all the Airbus aircraft have been delivered, the carrier's available ton kilometers--a measure of capacity--will increase by 12% from the end of December 2013, it added.

Separately, China Southern said it agreed to sell back six ERJ145 aircraft and certain spare parts to the aircraft manufacturer, without disclosing further details.

Write to Joanne Chiu at [e-mail]

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