South Korea's Asiana Airlines to buy six Airbus A380 jumbo jets
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South Korea's Asiana Airlines has agreed to a $1.8 billion deal to buy six Airbus A380 jumbo jets to be used on routes to Europe and the United States, the airline said on Thursday. The planes are to be delivered between 2014 and 2017.
AFP - South Korea's Asiana Airlines said Thursday it had agreed to buy six Airbus A380 superjumbos in a deal worth $1.8 billion as it tries to cash in on booming demand from China and the rest of Asia.
The country's second-largest carrier said the European manufacturer had agreed to deliver the planes between 2014 and 2017, adding they would be used on routes to Europe and the United States.
The agreement, worth 2.04 trillion won ($1.8 billion), comes as an easing of visa rules on South Korean visitors to the United States and an ever-growing number of Chinese travellers fans demand for lucrative trans-Pacific flights.
"Long-haul flights are expected to grow by more than five percent each year due to free trade agreements (with the United States and the European Union) and the visa waiver programme," CEO Yoon Young-Doo said in a statement.
"We made the decision to accelerate our growth," he said.
The Seoul-based air carrier has largely operated short-haul routes into Asia, while its bigger rival Korean Air has long dominated the long-haul market.
The aggressive investment plan came as airline operators seek to capitalise on soaring demand from China's increasingly affluent population and to attract more Asian passengers travelling to the US and Europe.
"The ultimate goal here is attracting more travellers from China and Southeast Asia who transfer flights in Incheon airport to go the US and Europe," said Song Jae-Hak, analyst at Woori Investment and Securities, referring to South Korea's main international airport.
China's demand for airline services in 2010 grew nearly 40 percent from a year earlier despite the global downturn which stifled growth in industrialised markets, Song said, calling Asiana's investment plan "doable."
"It's about absorbing more demand from the neighbouring Asian region... and the A380 is the best option to transport the maximum number of passengers, up to 700 people for each flight," he said.
China's rapidly expanding economy has seen the country's aviation sector grow at a blistering pace over the past few years, with few analysts seeing any likelihood of a slowdown.
In September, Hong Kong-based Cathay Pacific said it had confirmed an order for 30 long-range A350 Airbus aircraft with a book price of $7.82 billion -- the biggest single order in the carrier's history.
Industry association IATA last month warned global airline earnings for 2011 would slide amid high fuel prices and ongoing European debt crisis dampening demand.
Growth will largely come from fast-growing Asia, which will post 4.6 billion dollars in earnings in 2011, half of next year's profit, the International Air Transport Association forecasted.