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Charlotte So

Cathay Pacific Airways announced the largest aircraft  acquisition in its history yesterday, placing an order for 17  Boeing aircraft in a deal worth US$5.2 billion at list prices.
Cathay will buy 10 Boeing 747-8 freighters,  with an option for  14 more. The freighters will be delivered by 2012, replacing the carrier's   B747-200Fs which are being phased out.
Cathay's fleet of freighters will increase to 30 by 2010 from 19 now, a rise that includes  converting passenger planes to freighters.
'It is our objective to build Hong Kong into a major cargo hub,' said John Slosar, the company's chief operating officer.
Mr Slosar said  Cathay had confidence in the long-term growth of the air-cargo market.
The airline has tendered a bid for the third cargo terminal to be built at Chek Lap Kok.
'We can't see any sign that the US economy is slowing down,' chief executive Tony Tyler said.
Mr Tyler said demand growth in the US  was encouraging for both passengers and cargo. Cathay carried 5.1 per cent more cargo and 7.2 per cent more passengers last month  than in October last year.
To beef up its presence in the North American and European markets, Cathay also ordered seven B777-300ERs, putting its total order for such aircraft at 30 and making it the largest operator of B777-300s in the world.
'The B777 order could further strengthen Cathay's long-haul market, particularly in the premium class, which is the profit driver for Cathay,' said Kelvin Lau, a transport analyst at Daiwa Institute of Research.
The   B777-300  allowed for more business seats using a reasonable configuration, Mr Lau said.
Cathay said the fuel efficiency of these two aircraft could make them less affected by higher oil prices.
Boeing says the B747-8F consumes 22 per cent less fuel  than the B747-200, which Cathay is getting rid of. The B777-300 is said to be 22 per cent more fuel-efficient than the B747-400.
'It is more difficult to manage the fuel cost growth when there is a significant increase in oil prices,' Mr Tyler said.
The airline has used futures contracts to cover 40 per cent of its expected jet fuel consumption for the rest of the year. It is planning  to increase fuel surcharges and will make  an application to the government at the end of the month.
Fuel costs account for more than  30 per cent of Cathay's total operating expenses, with fuel surcharges covering half the expense.



Cathay orders record 17 aircraft