$3.8bn Airbus order from Hong Kong Airlines

Posted on 10 Jan 2012

Eyeing expansion into Europe, the Hong Kong carrier has ordered 10 Airbus A380 aircraft worth approximately $3.8bn, or £2.5bn, at list prices.

As reported by the Financial Times and the BBC, the order had risked being derailed by a dispute between the European Union and China.

But the airline’s head of corporate governance, Kenneth Thong, told a television interview with Bloomberg that the order would go ahead.

This was despite the Chinese government’s stance on climate change regulations. It opposes an EU plan that international airlines comply with a scheme to tackle carbon emissions.

Hong Kong Airlines (HKA), born in 2011 as CR Airways, is likely to have got a large discount on the order for the A380, Airbus’s flagship super-jumbo. The airline is small by Asian airline standards with fewer than 20 planes, but is thought to have 100 aircraft on order.

It currently provides passenger and cargo services within neighbouring countries. Mr Thong said the aircraft were needed to boost HKA’s growth, particularly business class services with Europe.

Its previous purchase of Airbus A330s are also destined to serve several European cities as the airline expands.
Mr Thong told Bloomberg television in Hong Kong: “We think the business connection between Asia and Europe is going to be very exciting for the next couple of years, after the current (economic) crisis is over. We are planning for the aftermath.”

It had been expected that HKA would announce a large A380 order last year.

But the Financial Times newspaper reported that this was held up over the China’s opposition to the EU’s carbon emissions trading scheme, which would involve airlines paying additional costs.

While rival Boeing posted its 2011 sales report last week, Airbus is expected to acknowledge the HKA contract formally with its 2011 annual report on January 17.

With big order backlogs, the world’s two largest aircraft makers are looking for ways to streamline production and, in Boeing’s case, to source parts from more suppliers to increase throughput.