China Eastern Airlines orders 101 Airbus aircraft, total price exceeds 100 billion yuan

Reprinted from: Securities Times

Securities Times reporter Zang Xiaosong

On March 25, China Eastern Airlines (600115) signed a purchase agreement with Airbus (hereinafter referred to as “Airbus”) in Shanghai, intending to purchase 101 A320NEO series aircraft from Airbus. The total list price of the aircraft to be purchased in this transaction is approximately $15.802 billion (about 108.893 billion yuan). China Eastern Airlines stated that, after multiple rounds of commercial negotiations, the actual transaction price agreed upon between the company and Airbus is significantly lower than the basic list price, resulting in a relatively favorable discount.

China Eastern Airlines stated that the aircraft introduced by the company this time are Airbus’s latest generation of narrow-body models, which will help the company supplement its narrow-body capacity, optimize its fleet structure, reduce fuel consumption and unit costs, optimize its route network, and enhance passengers’ in-flight travel experience. This will strongly support the company’s strategic plan of “flying farther, flying internationally, and flying into emerging markets,” and help the company achieve its “dual carbon” goals.

The total list price of the 101 A320NEO series aircraft scheduled to be purchased this time is approximately $15.802 billion (Airbus’s January 2024 list prices). The above list prices include the airframe, engines, etc., and are adjusted according to the delivery schedule by formula.

“Airbus has offered the company a significant amount of price discount. The actual price of these aircraft is significantly lower than the above list price. And the company confirms that the price discount obtained in this transaction is fair and reasonable, and is more favorable than the price discounts obtained in the company’s previous purchases of aircraft from Airbus.” China Eastern Airlines emphasized that the company plans to provide funding for this transaction using funds obtained through its own funds, commercial bank loans, issuing bonds, and other financing instruments. The consideration for this transaction will be paid in installments, and it is expected not to have a major impact on the company’s cash flow situation and business operations.

The series of aircraft purchased this time is planned to be delivered to the company in batches from 2028 to 2032. Among them, 9 aircraft are planned for delivery in 2028, 19 in 2029, 30 in 2030, 27 in 2031, and 16 in 2032. The company estimates that during the delivery period of these aircraft from (2028 to 2032, there will be at least 53 A320 series aircraft that will exit operation due to lease expirations or aircraft age factors, so the 101 aircraft purchased this time will partly serve to replace and update existing aircraft models.

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