China Southern Airlines to buy six Boeing B777Fs

– Tue May 31, 9:09 am ET

HONG KONG (AFP) – China Southern Airlines, one of China's major air carriers, said on Tuesday that it has agreed to buy six Boeing 777 freighters, as the company continues to grow its cargo business.

The carrier said the six aircraft, to be delivered between 2013 and 2015, have a list price of $1.58 billion with the purchase being funded by bank loans and China Southern's operating fund.

It described the deal as being "consistent with the (airline's) development strategy."

"The acquisition will facilitate the optimisation of the structure of the group's cargo business, freighter fleet and cargo traffic capacity," the carrier said in a statement to the Hong Kong stock exchange Tuesday.

China Southern said the new aircraft will boost its cargo capacity, measured in available tonne kilometres, by 8.4 percent and enhance its operational efficiency, as well as the competitiveness of its cargo business.

The airline said it was granted "certain price concessions" by Boeing and was paying an amount "significantly lower" than the list price, without disclosing the actual cost.

Launched in 2005, the B777F is the world's longest-range twin-engine freighter, according to Boeing.

It has a revenue payload capability of more than 226,000 pounds (102.8 metric tonnes) and it can fly 4,880 nautical miles (9,038 kilometres) with a full payload.

The deal is the second major purchase this month by China Southern from the US aircraft giant.

Three weeks ago, the Chinese firm announced that its Xiamen Airlines unit would buy six 787 Dreamliners from Boeing, worth around $1.1 billion at list prices, as Chinese airlines boost their fleets to meet fast-growing travel demand.

The aircraft are due to be delivered between 2014 and 2015, and will boost Xiamen Airlines' fleet, which already stands at 71 Boeing jets serving 150 domestic and regional routes.

China Southern Airlines owns 60 percent of Xiamen Airlines.

China Southern has been aggressively ramping up its fleet, saying in November that it had agreed to buy 36 planes from Airbus for $3.78 billion, while rival Air China said in March it would buy five of Boeing's new 747-8 passenger planes with a combined list price of $1.54 billion.

The Chinese carrier's 2010 profit has rocketed as demand for air travel booms in China with the firm's passenger numbers rising 15.4 percent to 76.46 million.

A total of 267 million air passenger trips were recorded in the country in 2010, up 15.8 percent from the previous year, official figures showed, reflecting growing prosperity among the country's booming middle class.

Hong Kong-listed shares in China Southern closed down 1.23 percent at HK$4.03 (52 US cents) on Tuesday.

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