Airbus A350 Gets Boost as Cathay Backs Jet Over Dreamliner
Airbus A350 Gets Asian Boost as Cathay Endorses Jet
Airbus SAS. via Bloomberg
Cathay, the largest airline in Hong Kong, signed a letter of intent to buy 30 Airbus A350s.
Cathay, the largest airline in Hong Kong, signed a letter of intent to buy 30 Airbus A350s. Source: Airbus SAS. via Bloomberg
Aug. 5 (Bloomberg) -- Cathay Pacific Airways Ltd. Chief Executive Officer Tony Tyler talks with Bloomberg's Rishaad Salamat about the company's business strategy and growth outlook. Cathay said yesterday it will buy 36 Airbus SAS and Boeing Co. planes after posting better-than-estimated profit. Shares of Cathay, Hong Kong’s largest carrier, climbed yesterday to the highest in more than two years as demand recovers from a travel slump during the global recession that had forced the company to park planes and give staff unpaid leave. (Source: Bloomberg)
Both the A380 and the Dreamliner have had production delays
Simon Dawson/Bloomberg
An Airbus SAS A380 airplane, right, flies over a Boeing 787 Dreamliner airplane.
An Airbus SAS A380 airplane, right, flies over a Boeing 787 Dreamliner airplane. Photographer: Simon Dawson/Bloomberg
Airbus SAS’s order for 30 A350s from Cathay Pacific Airways Ltd. may spur sales in China, a market already set to receive about a quarter of the aircraft built by the planemaker over the next five years.
“The major Chinese airlines watch Cathay very closely, as well they should,” Airbus Chief Operating Officer John Leahy said yesterday after Hong Kong-based Cathay announced the planned order. “This is a big win for Airbus and the A350.”
The Cathay order, the joint largest for the A350 in Asia, boosts Airbus’ presence in a region that will likely buy more planes than Europe or the U.S. over the next 20 years partly because of Chinese demand. The deal may also help the planemaker close the gap on Boeing Co.’s 787, which has 863 firm orders to the in-development A350’s 535.
“Getting a commitment from Cathay is really positive in terms of showing confidence in the plane,” said Oddo Securities analyst Yan Derocles in Paris, who recommends investors buy shares of European Aeronautic, Defence & Space Co., the parent of Toulouse, France-based Airbus.
Asia has so far only accounted for 18 percent of the A350’s backlog, Derocles said. The planemaker’s global market forecast projects airlines in Asia Pacific will purchase 31 percent of all new commercial aircraft seating more than 100 passengers in the next two decades.
‘Works Better’
Cathay picked the A350 over the 787 because “in our network, it just works better,” Chief Executive Officer Tony Tyler said today in a Bloomberg TV interview in Hong Kong. “The availability of the aircraft is good for us as well.”
The carrier will fly the plane to secondary cities in Europe and the U.S. that don’t have enough demand to fill larger aircraft, he said. He didn’t name any specific destinations. Cathay will begin to receive the aircraft, which are capable of flying over 8,000 nautical miles non-stop, in 2016.
The airline also yesterday announced an order for six Boeing 777-300ERs after posting an eightfold jump in first-half profit on asset sales and rebounding travel demand. The airline already has 18 777-300ERs in its fleet, and another 12 on order.
Cathay jumped 4.5 percent to HK$18.90 at 11:04 a.m. in Hong Kong trading today. EADS yesterday rose 0.7 percent to 18.14 euros in Paris yesterday.
Asiana Airlines Inc, South Korea’s second-largest carrier, has also ordered 30 A350s, which have a list price of about $225 million. Singapore Airlines Ltd. has ordered 20 A350s. Airbus has 33 firm customers for the plane, none from mainland China.
China Plane Demand
China will likely order a total of 3,272 aircraft with more than 100 seats in the 20 years ending 2028, trailing only the U.S., according to an Airbus forecast. The Asian nation is developing its own passenger jet to challenge Airbus and Boeing.
Asia is the second-largest market for Airbus’s A330 and A340 wide-body planes behind Europe. Excluding the A380 superjumbo, aircraft of that type account for about 30 percent of all Airbus deliveries to Asia-Pacific carriers.
Airbus is working to maintain its schedule for first A350 deliveries in July 2013, after the A380 superjumbo was marred by years of delays and slower-than-planned production. Boeing is also behind on the 787 Dreamliner.
The European company plans to debut the A350 with the -900 variant purchased by Cathay. That plane, seating 300, will be followed by the smaller A350-800 in 2014. A larger type, the A350-1000 that seats 350, is scheduled for 2015. Rolls-Royce Group Plc is the aircraft’s only engine supplier.
By spanning the range from 260 to 350 seats, the A350 aims to rival both the 787 Dreamliner as well as the larger 777 series, which generally seats 300 to 400 passengers and dominates that part of the market.
Middle East Buyers
Among the biggest buyers so far for the A350 have been Emirates, with an order for 70, Qatar Airways, which has ordered 80, and Etihad with a deal for 25. All three carriers are in the Middle East, marking more competition for Asian and European airlines as they seek to funnel price-sensitive passengers through their hubs between Asia and Europe.
Airbus and Boeing relied on smaller single-aisle jets for the bulk of orders at the Farnborough Air Show last month. Airbus won 130 contracts with a list price of $13 billion and Boeing won 103 orders worth $10 billion, with the two announcing $19 billion combined in preliminary commitments.
To contact the reporter on this story: Andrea Rothman in Paris at aerothman@bloomberg.net
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