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China Southern Airlines to buy six Boeing B777Fs
by Staff Writers
Hong Kong (AFP) May 31, 2011

Cathay urges third runway at Hong Kong's airport
Hong Kong (AFP) May 31, 2011 - Hong Kong carrier Cathay Pacific on Tuesday called for a new third runway at the city's airport, saying the facility had become a "victim of its own success" as travel demand grows in the region.

The call was made as the city's airport authority was set to begin a three-month public consultation on its new 20-year development blueprint, said to include plans for a third runway at a cost of HK$86 billion ($11 billion).

"A third runway at (the airport) is going to be needed," Cathay chief executive John Slosar said in Sydney, according to a statement issued by the airline in Hong Kong.

"Connectivity with the rest of the world has made Hong Kong what it is today so we must be clear on how we can maintain and grow these linkages for tomorrow," he added.

The statement warned that Hong Kong's airport, one of the busiest in the region, "had become a victim of its own success", as it battles traffic congestion and increasing competition from airports in neighbouring cities.

Cathay said the current two runways at the airport will be saturated within the next nine years -- up to 20 years earlier than the original prediction of 2040.

Cathay has ordered 87 new aircraft, with a total list price of HK$180 billion ($23 billion), scheduled for delivery between now and 2019 as it seeks to cash in on booming demand for travel in Asia.

Dow Jones Newswires, quoting unnamed sources, on Monday reported that the new runway is likely to cost HK$86 billion at 2010 prices, a project that will involve the reclamation of 650 hectares (1,606 acres) of land.

The price tag is far higher than the HK$55 billion cost of the existing facilities at the airport, which was opened in 1998, due to soaring construction material prices and the amount of reclamation required.

The airport set a single-day record of 1,003 flight movements in April. In 2010, the airport handled 4.1 million tons of cargo and 50.9 million passengers.

China Southern Airlines, one of China's major air carriers, said Tuesday it has agreed to buy six Boeing 777 freighters, as the company continues to grow its cargo business.

The carrier said the six aircraft, to be delivered between 2013 and 2015, have a list price of $1.58 billion with the purchase being funded by bank loans and China Southern's operating fund.

It described the deal as being "consistent with the (airline's) development strategy."

"The acquisition will facilitate the optimisation of the structure of the group's cargo business, freighter fleet and cargo traffic capacity," the carrier said in a statement to the Hong Kong stock exchange Tuesday.

China Southern said the new aircraft will boost its cargo capacity, measured in available tonne kilometres, by 8.4 percent and enhance its operational efficiency, as well as the competitiveness of its cargo business.

The airline said it was granted "certain price concessions" by Boeing and was paying an amount "significantly lower" than the list price, without disclosing the actual cost.

Launched in 2005, the B777F is the world's longest-range twin-engine freighter, according to Boeing.

It has a revenue payload capability of more than 226,000 pounds (102.8 metric tonnes) and it can fly 4,880 nautical miles (9,038 kilometres) with a full payload.

The deal is the second major purchase this month by China Southern from the US aircraft giant.

Three weeks ago, the Chinese firm announced that its Xiamen Airlines unit would buy six 787 Dreamliners from Boeing, worth around $1.1 billion at list prices, as Chinese airlines boost their fleets to meet fast-growing travel demand.

The aircraft are due to be delivered between 2014 and 2015, and will boost Xiamen Airlines' fleet, which already stands at 71 Boeing jets serving 150 domestic and regional routes.

China Southern Airlines owns 60 percent of Xiamen Airlines.

China Southern has been aggressively ramping up its fleet, saying in November that it had agreed to buy 36 planes from Airbus for $3.78 billion, while rival Air China said in March it would buy five of Boeing's new 747-8 passenger planes with a combined list price of $1.54 billion.

The Chinese carrier's 2010 profit has rocketed as demand for air travel booms in China with the firm's passenger numbers rising 15.4 percent to 76.46 million.

A total of 267 million air passenger trips were recorded in the country in 2010, up 15.8 percent from the previous year, official figures showed, reflecting growing prosperity among the country's booming middle class.

Hong Kong-listed shares in China Southern closed down 1.23 percent at HK$4.03 (52 US cents) on Tuesday.

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