China Lessor CALC Talks With Airbus, Boeing to Buy 200 Jets

(Bloomberg) -- China Aircraft Leasing Group Holdings Ltd. is in talks with Airbus SE and Boeing Co. to order as many as 200 planes as the state-backed lessor seeks to meet surging demand from Asian carriers.

The company is looking at single-aisle and wide-body jets from the planemakers, with the bigger aircraft slated to account for 20 percent of the order, Chief Executive Officer Mike Poon said in an interview in Sydney on Monday. The models the lessor is considering include the Boeing 737 and Airbus A320 for short-haul flights, and the 787 and the A350 for long-haul routes, he said.

The leasing company, which has shareholder approval to order the aircraft this year, is expanding its fleet to help meet demand in Asia, a region Boeing estimates will need 16,050 new aircraft valued at $2.5 trillion by 2036. China alone is likely to surpass the U.S. as the world’s biggest air travel market by as early as 2022, according to IATA forecasts.

While the leasing company is weighing both the manufacturers, China is also under pressure from U.S. President Donald Trump to cut its annual trade surplus by $200 billion. Airliners are among the biggest-ticket items that can be bought to help meet such targets reached in trade negotiations.

Deal or No Deal: Can China Shrink U.S. Deficit by $200 Billion?

Boeing rose 1.7 percent to $362.74 at 9:47 a.m. in New York, while Airbus was little changed at 99.54 euros in Paris.

A decision by China Aircraft Leasing, known locally as CALC, will depend on the pricing and the available slots with the manufacturers, Poon said while attending the International Air Transport Association’s annual meeting in Sydney.

CALC, where government-controlled China Everbright Group has a 33.6 percent stake, was the first Asian plane leasing company to list in Hong Kong.

It has previously made large orders. In December, the company agreed to buy 50 Airbus single-aisle jets with a combined list price of $5.42 billion.

In 2016, the lessor agreed to purchase 60 ARJ21 regional jets from state-owned Commercial Aircraft Corp. of China Ltd., in a deal valued at $2.3 billion in list prices. In 2014, Airbus won a pledge from the lessor for the purchase of 100 planes valued at $10.2 billion.

As of May 28, CALC had 114 aircraft, 101 of them belonging to the A320 family. Seven are 737s and six are A330s. It had 140 Airbus planes and 50 Boeing aircraft on order, along with 20 C919 jets made by China’s Comac.

The rapid growth of mainland Chinese carriers and the entry of many budget operators across Asia has meant billions of dollars in orders for Airbus and Boeing. Asia Pacific is likely to have 3.5 billion passengers by 2036, adding more than double the forecast for North America and Europe combined, according to estimates by the International Air Transport Association.

©2018 Bloomberg L.P.

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