Hainan Airlines deals may lead to big orders

PUBLISHED : Saturday, 05 March, 2011, 12:00am
UPDATED : Saturday, 05 March, 2011, 12:00am

Hainan Airlines Group is expected to sign important aircraft deals on Tuesday that industry insiders say could lead to a significant order for Boeing and future orders for Airbus and business jet makers Dassault Falcon and Gulfstream.

Executives from the airline group and aeroplane manufacturers will ink letters of intent and memorandums of understanding for future aircraft orders, rather than sign firm orders themselves, insiders said. The agreements will be signed after the formal opening of the Asian Aerospace show in Hong Kong on Tuesday morning.

There were no details about how many aeroplanes were involved or the types of aircraft, although one aviation industry source speculated HNA could sign a pact agreeing to order the double-deck jumbo Airbus A380 sometime in the future.

Hainan Airlines has grown rapidly in the past 10 years and had 86 aircraft in service at the end of February and a further 58 on order, according to figures from the Centre for Asia Pacific Aviation.

These include about 70 Boeing 737 narrow-body aircraft and more than 10 Airbus passenger aeroplanes, including five longer-range A330-200s and A340-600s.

The carrier started a thrice-weekly passenger service between Shenzhen and Sydney in January, the first time Shenzhen was linked with a direct flight to Australia. The aircraft were more than 80 per cent full during the first month of operation. Hainan Airlines is also planning to launch services between Beijing and Zurich.

The carrier, which owns the DeerJet business jet company, is also set to expand its executive jet operations through future orders with Dassault Falcon and Gulfstream.

Plans for the aircraft deals coincided with an unconnected and separate agreement between Canadian aircraft maker Bombardier and ICBC Leasing, under which the mainland leasing outfit would provide up to US$8 billion.

Under the memorandum of understanding signed by the two firms, ICBC Leasing will provide financing and leasing services to buyers of Bombardier's range of commercial passenger aircraft seating between 37-149 people and business aircraft.

The agreement also covers financing for Bombardier to expand its aircraft maintenance and other services, as well as credit facilities, hedging and settlement services for Bombardier's general requirements through subsidiaries of Industrial and Commercial Bank of China.

'The financial resources of ICBC Leasing put Bombardier in a stronger competitive position and support our long-term objective of growing our business in China and the Asia-Pacific region,' said Mairead Lavery, Bombardier's vice-president for strategy, business development and structured finance.

Bombardier has forecast that a combined 600 business jets from all manufacturers would be delivered in China between 2010 and 2019, with a further 500 in the rest of Asia and Australasia and 325 in India.

Branching out

Hainan Airlines began a Shenzhen-Sydney service in January

The carrier's three-times-a-week service has been well received, with passenger load in the first month of: 80%