Air China’s subsidiary Shenzhen Airlines will purchase 46 B737 series aircraft from Boeing at a base price of US$4.3 billion in an agreement signed on June 3.
Cash payment for the purchase will be paid in installments between 2016 to 2020 and funded by operational revenues and financing by banks and other financial institutions.
The purchase will expand the carrying capacity of Shenzhen Airlines as well as the group by 6%, and the impact on the cash flow or operational management of Shenzhen Airlines will be minimal.
One industry observer said the purchase indicates growing demand for domestic air service and a positive outlook for international routes.
Domestic air routes have maintained steady growth in revenues, but China’s carriers are deploying more capacity on international routes as outbound tourism is being fueled by growing consumption power while domestic economy is slowing down.
International routes enjoy a rosier outlook than domestic routes and as such, Shenzhen Airline’s surplus transportation capacity can better augment the Air China Group‘s international operations and improve overall efficiency. (Translation by David)
