bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Hong Kong Dragon Airlines (Dragonair) has committed itself to an ambitious multi-billion dollar strategy of fleet expansion and replacement to propel the carrier through its move to Chek Lap Kok airport.

 The carrier has also refused to rule out a further spate of aircraft purchases if, as expected, it gains new routes and frequencies on the mainland from the Beijing government in coming months.

 The timing of the revelation of Dragonair's expansion plans has been seen as particularly significant because of the need of its biggest shareholder, China National Aviation Corp (CNAC), to market its upcoming float to investors.

 CNAC holds a 35.86 per cent stake in Dragonair - a stake which is likely to be included in the CNAC listing vehicle.

 A group official said last week it was looking to list in Hong Kong 'as soon as possible'.

 Yesterday, Dragonair gave a detailed breakdown on what is set to be the largest spending programme in its 12-year history.

 The most important component of the programme is a a plan to buy eight aircraft outright - including the certain take-up of five options it has held for some time on single-aisle Airbus A320 aircraft - with a total list price of $3.5 billion.

 It will also replace its seven leased A320 aircraft with updated models, also leased at an unspecified cost.

 Dragonair yesterday confirmed the purchase of an A330-300 wide-bodied aircraft, due for delivery in October next year, as the first step in its eight-aircraft buying spree. This will be the sixth A330 in its fleet.

 It also announced it now had another option to buy an A320 aircraft.

 Two other A320 aircraft already ordered from Airbus will be delivered within the next two years.

 This is set to give Dragonair a fleet of 21 aircraft by the turn of the century, comprising 15 A320s and six A330s. That figure will represent a doubling of the airline's fleet size over a four-year period.

 Dragonair chief executive Stanley Hui yesterday gave the strongest assurance yet the airline would take up the five A320 options.

 'If we exercise all of the options - and we will - this [purchase programme] will represent the biggest investment we've ever made,' Mr Hui said.

 After the briefing, Dragonair director of planning and international affairs Augustus Tang hinted the latest purchases would not be the limit of the carrier's expansion plans.

 The key to further expansion by Dragonair was meetings later this year between air services representatives from Hong Kong and the mainland, Mr Tang said.

 An Economic Services Branch delegation is expected to negotiate with the mainland's Hong Kong and Macau Affairs Office later this year on routes and frequencies.

 Dragonair is understood to be confident of winning new frequencies and routes - a development which can lead to further aircraft purchases - but it may encounter opposition from mainland carriers such as China Southern and China Eastern.

 Dragonair is looking at starting at least five new routes on the mainland if it can win the approval of mainland authorities.

 Significant gains on this front and on frequencies could lead the airline to make a 'major, major decision on the fleet' by early next year, Mr Tang said.

 Some constraints on growth could arise through a lack of experienced personnel to fill positions created by growth, he said.

 The purchases are partly designed to reduce the age of Dragonair's fleet, with its A320 fleet in 1999 to have an average age of less than a year.

 Mr Hui denied there was any significant financial liability despite the fleet reorganisation.

 'We have a very liquid financial situation,' he said.



Dragonair to boost fleet as CNAC float looms