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China's Shandong Airlines orders 50 Boeing planes for $4.6 bn

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(Globalpost/GlobalPost)

Shandong Airlines, one of China's smaller carriers, said it has agreed to buy 50 passenger planes from US manufacturer Boeing for $4.6 billion, in another sign of the country's growing demand for air travel.

The company signed a deal on Monday to purchase 16 Boeing 737-800s and 34 Boeing 737 MAX planes, a statement said, in a drive to grow its fleet for future business expansion.

China's commercial airline industry is dominated by the "Big Three" -- flag carrier Air China, China Eastern Airlines and China Southern Airlines -- but a move towards greater competition has seen the growth of smaller players.

The order represents a win for Boeing in the giant Chinese market and a vote of confidence in its newest family of single-aisle planes, the 737 MAX, which promises greater fuel efficiency.

The manufacturer will begin deliveries of the 737 MAX to global customers beginning in 2017, according to Boeing's website.

Boeing could not be reached to confirm the order, but it typically allows the customer to make the announcement.

Shandong Airlines aims to increase its fleet to more than 140 aircraft by the end of 2020, roughly doubling its total stock of planes, China's official Xinhua news agency late Monday quoted an airline official as saying.

It already operates 67 Boeing 737 planes, Xinhua said.

The airline, based in the eastern province of Shandong, will receive the aircraft in batches between 2016 and 2020, the statement said.

Shandong Airlines, established in 1994, is controlled by the Shandong Aviation Group which is backed by several government shareholders including Air China and the Shandong Economic Development and Investment Co.

Stock investors cheered the plane order. Shandong Airlines, which is listed on China's Shenzhen stock exchange, was up 3.54 percent by midday on Tuesday.

- Battle for lucrative orders -

Fierce rivals Boeing and European consortium Airbus have locked horns in a battle for lucrative orders in China, which is seeing a rapidly expanding domestic airline sector.

While slow growth in Western economies is hitting the aviation industry, Asian countries are booming with an emerging middle class keen to take to the air.

The Asia-Pacific region will require almost 13,000 new airplanes worth $1.9 trillion over the next 20 years, Boeing said earlier this year.

At Asia's premier air show in February, organisers announced a record high of more than $32 billion in deals as Asian carriers ordered more aircraft to meet the explosive demand for cheap, short-range travel.

Airbus accounted for nearly half of that total at the Singapore Airshow, with almost $15 billion worth of orders for its popular A320 single-aisle plane and flagship A380 superjumbo.

Boeing said last year that it expects China's commercial aircraft fleet to triple in size over the next two decades as the country's strong economic growth boosts air traffic.

China will need 5,580 new airplanes worth $780 billion by 2032, it said.

In September last year it finalised an order with China's Xiamen Airlines of six Boeing 787 Dreamliners, worth about $1.3 billion at list prices.

And in March last year it signed a deal with Air China for 31 passenger and cargo planes, a deal worth $5.2 billion at Boeing list prices at the time.

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http://www.globalpost.com/dispatch/news/afp/140422/chinas-shandong-airlines-orders-50-boeing-planes-46-bn-0