The largest order in the history of China's three major aviation state-owned enterprises, which went to the European aircraft manufacturing giant Airbus, has aroused widespread concern in the industry.

  On the evening of July 1, China Southern Airlines, Air China and China Eastern Airlines successively announced that they plan to purchase 292 Airbus A320NEO passenger aircraft, with a total list price of 37.257 billion US dollars, or more than 240 billion yuan in RMB.

  According to the announcement of the three major airlines, the transaction amount of the aircraft purchase contract was determined after arm’s length negotiations between the parties to the contract.

In the actual transaction, Airbus will give the airline a relatively large margin, so the actual price of the aircraft purchased this time will be lower than the above basic price.

  According to the surging news reporters combing past announcements of the three major airlines, this transaction is the single order with the largest quantity and the highest order amount among the aircraft purchase orders of the three major airlines in history.

  Why are the three major airlines throwing out the largest order in history?

Why did this "group purchase" order choose the Airbus A320NEO?

What does this order mean for Airbus' biggest rival Boeing?

Why did the three major airlines sign the largest order in history at this node?

  China Southern Airlines, Air China and China Eastern Airlines are the three major aviation state-owned enterprises in my country, and their business volume accounts for half of the country.

In 2021, the total transportation turnover of the three major airlines and their subsidiaries will account for more than 60% of the total transportation turnover of each airline, reaching 66.3%.

The operating income of the three major airlines totaled 243.303 billion yuan, accounting for 57.31% of the total revenue of domestic airlines.

  Why did the three major aviation central enterprises join forces to buy planes at this time?

  "This order node may have a greater price advantage in vertical comparison for airlines." Civil aviation expert Li Hanming told reporters that the current aircraft sales industry is in a downturn due to the overcapacity caused by the epidemic, and is in a stage of gradual recovery. The discount will be even greater when purchasing the required aircraft at the current node, which also shows the confidence of the three major airlines in the growth of domestic and foreign travel demand of Chinese civil aviation after 2024.

  According to the announcement, the 292 passenger planes that the three major airlines plan to purchase this time have a relatively close delivery time, and they are all delivered in batches.

  An Airbus insider revealed to reporters that Airbus had a lot of global orders for more than 100 aircraft last year.

The respective orders of the three major airlines are not the largest orders for Airbus in recent years.

  Qiao Shanxun, secretary-general of the Expert Committee of the Henan Aviation Industry Association and researcher of the Henan Collaborative Innovation Center for Aviation Economic Development, told reporters that the purchase of planes by the central enterprises of the three major airlines is more like a "group purchase" activity, and the price may be lower than a single negotiation. .

"At present, the global aviation market is in a state of repair, and long-term growth cannot be ignored for short-term fluctuations. The purchase of new passenger aircraft now is also to plan and reserve the fleet capacity in advance."

  China Eastern Airlines stated in the announcement that the introduction of aircraft by the company is conducive to better business conditions when the aviation market has not yet fully recovered. The company has obtained better conditions than before in terms of aircraft prices and other business terms in this transaction. .

  This order is also in preparation for the update of the narrow-body aircraft of the three major airlines.

China Eastern said that during the delivery of the introduced aircraft, some of the company's existing narrow-body aircraft will be withdrawn one after another due to older aircraft age and lease expiration. Therefore, this order will partly play a role in the replacement and renewal of the existing aircraft.

China Southern said that the order will increase China Southern's capacity by about 13.0%.

Air China and Shenzhen Airlines' orders will increase Air China Group's capacity by about 10.4%.

  In addition, Li Hanming also mentioned that in the first half of this year, the epidemic situation spread in various places, and in the second half of the year, there were summer transportation blessings, so the purchase agreement was signed in the second half of the year, or it was also considered to not increase the performance pressure of the three major airlines in the first half of the year.

  In terms of the source of funds and payment methods for the transaction, the three major airlines said that the transaction amount will be paid in installments and is not expected to have a significant impact on the company's cash flow and business operations.

  Last year, all domestic airlines lost 67.09 billion yuan, a decrease of 14.92 billion yuan from the previous year.

Among them, the net losses attributable to shareholders of listed companies for the three major airlines continued to expand last year, with a total net loss of 40.959 billion yuan, accounting for more than 60% of the total loss of the entire airline company.

In the first quarter of this year, the total revenue of the three major airlines in the first quarter was 47.054 billion yuan, and the total loss was 21.156 billion yuan.

  Why did the three largest orders in aviation history choose the Airbus A320NEO series?

  Even if it is a good launch opportunity, why did the three major airlines choose this narrow-body aircraft A320NEO from Airbus?

  The A320NEO series aircraft is Airbus' latest generation of narrow-body aircraft. It is a new engine option for its best-selling A320 series aircraft. It is also Airbus's flagship product in the single-aisle narrow-body aircraft market.

  The single-aisle narrow-body aircraft is the main passenger aircraft for domestic routes and short- and medium-haul international routes.

By the end of 2021, there were 4,054 transport aircraft in the civil aviation industry at the end of the period, of which 3,178 were narrow-body aircraft, accounting for nearly 80% of the transport fleet.

  Qiao Shanxun introduced to reporters that domestic airlines have strong demand for narrow-body aircraft, and the three major airlines also have large-scale narrow-body fleets. At present, narrow-body aircraft account for 70-90% of the total, and they have old aircraft themselves. update requirements, etc.

  The Airbus A320 and Boeing 737 are the two most popular single-aisle passenger aircraft in the world. This is also one of the most fiercely competitive markets between Airbus and Boeing, an established American aircraft manufacturer.

  In 2021, Airbus delivered a total of 611 passenger aircraft, while Boeing delivered only 340 aircraft in the same year. Airbus has become the world's largest aircraft manufacturer for three consecutive years.

After the Boeing 737MAX accident, Airbus has a tendency to dominate the single-aisle passenger aircraft market.

  It is worth noting that in 2021, the Airbus A320neo series aircraft will receive 661 new orders. This time, China's three major aviation central enterprises have ordered 292 aircraft, which is equivalent to 44% of Airbus' total orders for this type of aircraft last year.

  Competitors to the A320NEO family of aircraft include Boeing's 737 MAX and COMAC's C919.

As of the end of March this year, Airbus had delivered more than 2,000 A320neo series aircraft to customers.

Airbus says the A320NEO already has a 60 percent market share in this class.

  According to Airbus, the number of seats in the A320NEO series ranges from 120 to 220 seats (under the traditional two-class level), and the range is 6400-8700 kilometers according to different models.

Compared with the current A320 family aircraft, the A320NEO can reduce fuel consumption and carbon dioxide emissions by 20%, airframe maintenance costs by 5% and cash operating costs per seat by 14%.

Compared with competing models of the same level, the A320NEO has a single-seat fuel consumption advantage of 4% to 6%, and the A321NEO's single-seat fuel consumption advantage can reach 7%.

 What does it mean for Boeing 737 MAX and COMAC C919?

  It should be pointed out that at present, the Civil Aviation Administration of China has not yet fully approved the return of the Boeing 737 MAX.

In October 2018 and March 2019, there were two consecutive air accidents involving Boeing 737 MAX8 aircraft within six months.

Several countries have announced the suspension of commercial operations of Boeing 737 MAX8 aircraft.

  At present, the Boeing 737 MAX has been approved for airworthiness, and subsequent domestic airlines have to complete aircraft modification, recovery of parked aircraft, and driver training.

At the end of last year, the Civil Aviation Administration said that after the supplementary operation certification, it is expected to resume the commercial operation of the existing domestic fleet by the end of 2021 or early 2022, and restart the introduction of new aircraft.

  The C919 is my country's self-developed large jet airliner with independent intellectual property rights. At present, the C919 test flight certification and delivery preparations are still progressing in an orderly manner.

During the two sessions in Shanghai in 2022, Wu Yongliang, a member of the Shanghai CPPCC, deputy general manager and chief accountant of Commercial Aircraft Corporation of China, revealed in an interview with The Paper that the delivery is expected to be completed in 2022.

"The specific delivery will not be available until the forensics are completed."

  Regarding the impact of this Airbus order on the development of the C919 in the domestic market, civil aviation expert Lin Zhijie pointed out that the order totals 292 aircraft, which is equivalent to the number of aircraft introduced in the entire industry in one year before the epidemic. The aircraft will be delivered in 4 to 5 years. The number cannot meet the capacity needs of airlines in the next few years.

Chinese airlines also need to buy more planes in the future.

  Yang Yang, deputy general manager of the Marketing Center of COMAC, said at the Zhuhai Air Show at the end of September last year that the industrialization demand of the aviation market is huge, and the production capacity of Boeing and Airbus alone cannot meet the current needs of airlines. It may be set to 5 years, 10 years later.

Therefore, COMAC C919 faces the global market, and it must bring at least a new option for the air transport industry, and airline customers should be the biggest beneficiaries.

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