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Cathay Dragon

Cathay Dragon signs HK$31.7 billion deal for 32 new Airbus aircraft

The sister airline of Cathay Pacific Airways will take delivery of the A321neos between 2020 and 2023

PUBLISHED : Tuesday, 22 August, 2017, 7:02am
UPDATED : Tuesday, 22 August, 2017, 7:02am

Cathay Dragon has signed a HK$31.7 billion deal to purchase 32 new aircraft from European manufacturer Airbus, as the Hong Kong carrier plans ahead for expansion.

The sister airline of Cathay Pacific Airways signed the preliminary agreement on Tuesday for the largest single-aisle aircraft Airbus builds, the environmentally-friendly A321neo, in a move that will allow the airline to fly to more destinations.

Cathay Dragon chairman and Cathay Pacific CEO Rupert Hogg, who flew to France to sign the deal, hailed the order as “an exciting new chapter” for the regionally-focused airline.

The HK$31.7 billion deal is based on the total price of the marketed aircraft. Airlines usually negotiate substantial discounts.

Hong Kong’s second largest airline, which flies to 56 cities across Asia including 28 destinations on the mainland, will start the next decade with an expansion agenda, taking delivery of the new aircraft from 2020 until 2023.

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Airlines are leaning towards bigger aircraft at some of the busiest airports in the world, and Hong Kong International Airport is no exception.

Cathay Dragon has deemed the 168-seat Airbus A320ceo, which forms the bulk of its single aisle fleet, too small for its home airport, which is almost too full to add new flights until the addition of a third runway is ready by 2024.

With the selection of a larger aircraft, which seats 240 passengers, it will also mean more passengers to fill planes, and potentially more affordable airfares.

Rupert Hogg, Cathay Pacific CEO and Cathay Dragon chairman, said in a statement: “Having focused on modernising and expanding Cathay Pacific’s long-haul fleet in recent times, this is an exciting new chapter for Cathay Dragon following last year’s rebranding to enhance a seamless travel experience for our customers.”

“The substantial investment we are making in new aircraft underlines our confidence in the future of the Cathay Pacific Group, as well as our commitment to bolstering Hong Kong’s position as Asia’s largest international aviation hub as we bring new connectivity to and from our home.”

The Cathay Pacific Group attracted negative attention last week as it swung from a profit in the first half of 2016 to a HK$2.05 billion loss for the same period 2017, a decline of 681 per cent.

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The 32 A321neos replace Cathay Dragon’s ageing fleet of 15 A320ceos and eight A321ceos – some of which will have been in service for 24 years before retirement. The airline also flies 24 widebody Airbus 330 aircraft.

The “neo” refers to a technologically advanced fuel-efficient engine, distinct to the standard “ceo” conventional engine, and the plane will cut fuel and noise pollution by up to 50 per cent.

By keeping Cathay Dragon as long-standing Airbus customers, John Leahy, the plane manufacturer's chief operating officer, customers, said his company was “proud” to have won the order.

“The A321neo offers the lowest possible operating costs, longest range capability and most spacious cabin in its class. It will be the perfect aircraft for Cathay Dragon as it builds on its success as one of Asia’s leading regional carriers,” he added.

The Post previously reported Cathay Dragon’s plan to buy up to 32 new aircraft.

Will Horton, analyst for CAPA Centre for Aviation, said the new aircraft’s lower operating cost meant the airline could add new flights to Northeast China, Japan, Southeast Asian – especially Indonesia, India and Bangladesh. The northernmost parts of Australia could also be reached, too.

“Adding new destinations and frequencies adds value and uniqueness for local and connecting traffic,” he said. “There is also a feeling that besides having new markets to serve, Cathay fell behind in secondary Japanese cities.”