Record purchase reflects 'aggressive' expansion plan

Cathay Pacific Airways has signed a deal with Airbus SAS to buy 30 new A350-900 aircraft for $7.82 billion - it's biggest-ever single-batch purchase. Deliveries will begin in 2016 and are scheduled to stretch over a three-year period ending in 2019, Cathay announced Thursday.

"The purchase of these new generation aircraft is an important step in our plan to grow our fleet to ensure that we stay at the forefront of the industry," said Cathay Pacific Chief Executive Officer Tony Tyler at the signing ceremony. "The A350 fits perfectly into our operation. Its passenger capacity, flight range and operating economics are just right to become the backbone of our mid-sized long haul wide-bodied fleet."

Francis Lun, Fulbright Securities general manager, described the airline's expansion plans as "very aggressive", saying that it is a reflection of Cathay's bullish outlook on its business development.

Asked whether the airline is expanding too quickly during the current positive economic climate, Lun stressed that it is difficult for the carrier to accurately guess the state of the global economy three years in the future. "What the carrier can do is project realistic market demand in the next few years," Lun said.

"Cathay doesn't need to pay all the cash at once as the aircraft delivery will take several years to be completed, so it will relieve immediate financial pressure arising from the agreement," Lun added.

Cathay Pacific said that the carrier will fund the transaction though commercial bank loans, other debt instruments and cash generated from the company's business operations. They plan to pay for the planes in eight separate cash installments.

The airline emphasized that the purchase is vital for it to replenish and expand the fleet, and that these new aircraft will serve the long-haul European market.

Separately, the carrier last Friday published its combined traffic figures with wholly-owned subsidiary, Dragonair, for August 2010.

The two airlines' passenger traffic was up 9.7 percent in August 2010 compared with a year ago. The passenger load factor rises 0.3 percent. On the freight side, the two companies' cargo and mail traffic were up 13.1 percent from a year ago. The cargo and mail load factor saw an 0.7 percentage point rise.

Cathay Pacific said that the revenue and business volumes arising from its passenger business are still lower than the period before the financial crisis in 2008.

China Daily

(HK Edition 09/17/2010 page2)