Cathay Pacific Still Looking at ‘Very Large Aircraft’ Market

Cathay Pacific Airways has confirmed that it is in discussions with Airbus and Boeing to acquire up to 14 additional aircraft, with sources suggesting that these will all be in the ‘Very Large Aircraft’ (VLA) market, a segment which includes just the Airbus A380 and Boeing 747-8I. After announcing orders and lease deals for 27 additional widebodies at this week’s Asian Aerospace trade show in Hong Kong, executives confirmed that discussions continue with the two manufacturers, but no information was provided when a decision may be announced.

Cathay Pacific now has more than 90 new aircraft on order for delivery this decade after signing a deal with Airbus for 15 more A330-300s, with Boeing for ten additional 777-300ERs and with lessor International Lease Finance Corporation (ILFC) for two A350-900s. These aircraft will all be delivered by the end of 2105, according to the airline, and will enable it to “replace older, less fuel-efficient aircraft” and at the same time continue with the expansion of its passenger network.

“Our plan is to retire our 21 747-400 and eleven A340-300 aircraft before the end of the decade as we take delivery progressively of new generation aircraft that will provide much greater fuel and operating cost efficiencies. This is important both for environmental reasons and from a financial perspective as fuel remains our greatest single cost,” said Tony Tyler, Chief Executive Officer, Cathay Pacific Airways. “Cathay Pacific has ambitious plans moving forward and we need to ensure that we have a highly efficient and environmentally friendly fleet to meet those plans.”

The orders were announced as the company’s parent, Cathay Pacific Group, reported profits of HK$14,048 million (£1,113 million) for 2010, nearly three times the HK$4,694 (£372 million) figure from the year earlier. The group put its success down to sustained passenger demand, with consistently strong loads and a 29.3% year-on-year increase in passenger revenues to $HK59,354 million (£4,705 million). Cathay Pacific and its sister carrier Dragonair carried 26.8 million passengers during the full year, a 9.1 per cent increase on 2009.

Meanwhile, Air China, also long-mooted as a potential customer for the A380, has signed a firm order for five 748-Is, although Boeing has yet to formalise the agreement until the carrier receives government approval for the deal. The carrier has been operating the type since the early 1980s and as the table below illustrates, it currently uses them on flights from Beijing to just six destinations – Frankfurt, Los Angeles, New York, San Francisco, Shanghai Hongqiao and Tokyo Narita - having introduced the 777 onto many of its long-haul routes.

Source: Flightbase (August 14-20, 2011)

It is not clear which routes Air China will use the larger capacity version, which will offer improved operating economics, efficiency and environmental performance, with Boeing simply stating the carrier will utilise the type “to expand its international routes”. With seating for 467 passengers in a three-class arrangement they will offer around a 20 per cent capacity increase over Air China’s existing 747-400s and will therefore most likely be used on key routes to Europe, North America, as high-demand regional flights. There is also the likelihood that one or two of the aircraft could be used for Government duties as existing 747-400s are ‘borrowed’ by the state for international visits on an ad hoc basis, with the cabin being modified from a passenger to a VIP configuration by local MRO provider Ameco Beijing when required.