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Air China to buy 31 Boeing planes; As Cathay cancels freighters
by Staff Writers
Washington (AFP) March 1, 2013

Cathay Pacific cancels freighter aircraft order
Hong Kong (AFP) March 1, 2013 - Cathay Pacific Airways, the world's largest international air-cargo carrier, said Friday it will cancel an order for eight

Boeing 777-200F freighters due to slowing demand.

Instead the airline, which is Hong Kong's flag carrier, has signed an agreement to buy three Boeing 747-8 freighter aircraft.

It said the decision to cancel the order was made in light of its "reduced expectations for the future growth of air cargo shipments."

Cathay Pacific has been trying to trim costs after it fell into the red in the first half of 2012 with a HK$935 million ($121 million) loss, partly due to high fuel prices.

In a filing made to the Hong Kong stock exchange on Friday it signed an agreement to buy three 747-8 freighters at the list price of $1.02 billion, with options to buy five 777-200F planes.

"The company expects that the Boeing aircraft will deliver improved payload range capability at competitive operating costs," it said, referring to the purchase of the 747-8s.

The new planes will "facilitate the restructuring" of Cathay's freighter fleet, the statement said, adding the aircraft will be used primarily for long-haul destinations in North America and Europe.

It expects the aircraft to be delivered this year.

Cathay Pacific in December avoided facing industrial action after its flight crews threatened to stop serving alcohol and smiling at passengers as part of a "work-to-rule" action over a salary dispute.

The protest was sparked by Cathay's announcement last November that it was giving a two percent pay rise to its employees in 2013, falling short of the staff union's demands.

Air China signed an agreement Friday to buy 31 Boeing passenger and cargo planes from Boeing, subject to government approval, the Chinese flag carrier said.

Air China will purchase 20 Boeing 737-800 aircraft, two Boeing 747-8 aircraft, one Boeing 777-300ER aircraft and its unit Air China Cargo would buy eight Boeing 777 cargo planes, the airline said in a statement.

The total value of the deal is $5.2 billion at current Boeing list prices.

"The Boeing Company has granted to the company significant price concessions with regard to the Boeing Aircraft," Air China said.

Air China said the purchase would expand its overall fleet capacity by almost 19 percent and in particular strengthen the airline's market share in the international market.

"The company expects the Boeing Aircraft will deliver more cost-efficient performance and provide more comfortable services to passengers," it said.

Deliveries of the passenger planes are expected in 2014 and 2015, while Air China Cargo anticipated delivery of the 777 Freighters from 2013 to 2015.

Boeing spokesman Jim Proulx said the US aerospace giant would announce the order upon approval from Beijing.

"We look forward to working with Air China, a long-time valued customer, to obtain approval," he said in an email to AFP.

China's leading airline, which last year partnered with US JetBlue Airways, is seeking to expand its business in the United States.

Air China has been facing financial headwinds in recent months. According to the latest available earnings report, the carrier posted a 16 percent drop in third-quarter net profit from a year ago while sales edged up 2.2 percent.


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