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Boeing strikes $6-bn deal with Air China

23 December 2014

Global aircraft giant Boeing Co said yesterday it has struck a deal with China's flag carrier Air China Ltd for the sale of 60 Boeing 737 aircraft, valued at over $6 billion at current list prices.

Boeing 737 The deal includes Boeing's Next Generation 737s and its newest 737 Max air planes. The break-up of the aircraft models has not been provided.

Boeing 737 Max is the newest family of single-aisle airplanes build on Next Gen's popularity and reliability while delivering unsurpassed fuel efficiency with more advanced engines and winglets.

"Our long-standing and productive partnership with Air China dates back to the airline's beginning and we are proud the 737 has been part of their success," said Ihssane Mounir, vice president of sales and marketing, Northeast Asia, Boeing Commercial Airplanes.

"We are excited to see that the 737 family will play a significant role in Air China's continued success," Mounir added.

In a regulatory filing with the Hong Kong Stock Exchange, Air China said the aircraft deliveries will run from 2016 to 2020.

Through the purchase, Air China's fleet capacity will increase by about 8 per cent compared to end of December 2013, excluding adjustments to fleet structure such as disposal of old aircraft, the airline said.

Beijing-based Air China and its holding companies owned nearly 500 aircraft comprising Boeing and Airbus, with average age of 6.33 years, as of end-December 2013. The airline operates 298 passenger routes covering 31 countries and regions and 154 cities and is a member of the Star Alliance.

Applying significant concessions which Boeing has granted to Air China, the price tag could be less than $5.9 billion, Air China said.  The Chinese carrier intends to pay for the deal in installments, using cash from operations, bank loans and unspecified financing instruments.

Seattle-based Boeing said the latest order will be posted on its orders & deliveries website once all the details are finalised.

Boeing's partnership with Air China dates back to the 1970s. Air China is one of the largest 737 operators in China. The airline has received all of its 20 777-300ERs in the last three years. In September, Boeing delivered Air China's first of eight 747-8 Intercontinental jumbos on order, for the first time in Asia. Air China also has 15 787-9s on order.

Boeing's 2014 order book for commercial aircraft as of 16 December stands at 1,317 airplanes of which 1,019 are from the popular 737 family. The total orders are 2.8 per cent lower compared to last year's 1,355.

Shares in Boeing surged 1.6 per cent to $128.22 yesterday in New York, following the announcement of the Air China deal.

Separately, rival Airbus delivered yesterday its first advanced A350 mid-sized airplane made of composite materials, a competitor for Boeing's 787 Dreamliner, to Qatar Airways.

Airbus also made an effort to end the speculation about the future of its A380 super jumbo, the world's largest aircraft, which has a seating capacity of 525.

"The trend is in favour of the A380 and in this context the fact that we would have in mind internally at Airbus or Airbus Group that we would stop the A380 is just crazy," Airbus chief executive Fabrice Bregier said at an A350 delivery ceremony.

"After all the efforts we have made - we are about to break even next year - we are about to be successful with this programme ... so we will continue," he added.

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