Airbus Wins $7.3 Billion Plane Order From China Southern Air

China Southern Airlines Co. (1055), Asia’s biggest carrier by passenger numbers, agreed to buy 80 single-aisle jets with a list value of at least $7.3 billion from Airbus Group NV (AIR), as a growing economy fuels travel demand.

The Guangzhou-based carrier will buy 30 A320 jets and 50 A320neo planes, the company said in a statement to the Shanghai stock exchange. The A320neo is more fuel efficient.

A growing middle class in China is fueling a travel boom, with Airbus predicting that the country will overtake the U.S. as its largest single market. China Eastern Airlines Corp. ordered 70 Airbus A320s in March, and Boeing Co. this week won orders from a discount carrier.

The order will “optimize fleet structure, improve operational efficiency,” China Southern Airlines said.

The single-aisle aircraft market forms the backbone of the global air-travel industry and is split between Airbus and Boeing with its 737 model. The A320neo is the fastest-selling jet in commercial aviation history as customers clamor for models that burn less fuel, the single-biggest expense for most airlines.

Based on retail prices, the deal would be valued at $7.3 billion to $9.3 billion, according to the carrier, which said it will get discounts. Buying the planes will increase the airline’s capacity by about 12 percent, it said.

Delivery is set to begin in 2016, with some of the planes coming off Airbus’s final assembly line in China, the Toulouse, France-based aircraft maker said.

The largest contract ever placed by China with Airbus was in 2007, when the country announced a $17 billion deal for 160 jetliners.

In January, Boeing said it delivered 143 jets, a record, to China last year and expects to hand over a similar number of aircraft in 2014.

To contact the reporter on this story: Clement Tan in Hong Kong at ctan297@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Tan Hwee Ann, Nicholas Wadhams

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