Interface News Reporter | Xue Bingbing
On the evening of April 26, Air China (601111. SH) announced that it today signed an agreement with COMAC to purchase 100 C919 aircraft from COMAC at a total base price of about US$10.8 billion, which is scheduled to be delivered to Air China in batches from 2024 to 2031.
In late September last year, China Eastern Airlines, the world premiere user of the C919, announced that it had ordered 100 additional C919 aircraft to COMAC, and that order was also the largest single order for C919 at that time. With the issuance of Air China's latest order today, it means that the domestic large aircraft C919 has achieved a large order of 100 aircraft for the second time.
According to Jiemian News, like China Eastern Airlines, Air China's order for 100 C919 aircraft this time is also an additional order. On December 23 last year, Air China (601111. SH) has issued a domestic aircraft procurement announcement. According to the announcement, Air China plans to introduce 17 domestically produced aircraft, including 6 C919 and 11 ARJ21, with a total investment of 1.066 billion US dollars, which is expected to be delivered in 2024-2025.
The two ordered models are different, and the catalog price has increased
As the mainland's first self-developed narrow-body jet trunk airliner, the price of the C919 has always been a topic of considerable concern to the outside world. Jiemian News noticed that compared with the catalog price when China Eastern Airlines ordered 100 aircraft last year, the current C919 catalog price has risen.
According to China Eastern's announcement on September 28 last year, the total list price of the 100 C919 aircraft purchased by the company is about 9.900 billion US dollars (open market quotation, 2023 list price). According to Air China's announcement today, according to the latest list price provided by COMAC, the total base price of the aforementioned 100 C919 aircraft is about $10.8 billion.
Jiemian News noticed that the reason for the 9% price difference between the front and rear catalog prices is not that COMAC has adjusted the price of the aircraft, but that the C919 models ordered by Air China and China Eastern Airlines are different. Among them, Air China's announcement shows that the C919 aircraft (extended-range type) is ordered, and the announcement of China Eastern Airlines shows that the C919 aircraft (basic type) is ordered.
As early as June 2021, the Shanghai Municipal Government issued the "14th Five-Year Plan for the Development of Strategic Emerging Industries and Leading Industries in Shanghai", which mentioned that it would promote the completion of airworthiness certification and demonstration operation of the C919 single-aisle trunk aircraft, gradually realize the commercialization and industrialization, and start the serial development of the C919 single-aisle passenger aircraft such as lengthened and derivative types.
At the 6th CIIE in 2023, COMAC also exhibited the models of two new models of the C919 series - C919 Extended and C919 Shortened in the National Pavilion. According to the on-site introduction, the C919 extended model conforms to the development trend of large-scale single-aisle passenger aircraft market, with a two-cabin layout of 210 seats, to meet the operational needs of key cities in China and the Asia-Pacific region. The range extender ordered by Air China is also the extended range type here.
However, it is also important to note that the list price is not the actual price paid by the airline to the manufacturer. Air China mentioned in the announcement that the base price of each aircraft includes the price of the fuselage, additional parts and engines. After fair negotiation between the buyer and the seller, COMAC granted Air China a substantial discount on the purchase price of the aircraft, so the actual consideration for this transaction was lower than the basic price of the aforesaid aircraft. China Eastern Airlines also said that COMAC gave China Eastern a large price concession, so the actual price of this batch of aircraft was significantly lower than the catalog price.
In terms of payment methods and sources of funds, Air China said that the consideration for the transaction will be paid in cash instalments, and the transaction will be financed by the company's own funds, commercial bank loans and other financing methods. China Eastern Airlines said that the specific payment method is that the company will first pay part of the advance payment in installments, and then pay the balance on the delivery date of each aircraft. The source of funds is its own funds, commercial bank loans, bonds and other financing instruments.
Air China did not specify how many C919 aircraft it will introduce in 2024. According to the introduction plan disclosed in China Eastern's 2023 annual report, China Eastern Airlines will introduce 6 C919s in 2024, 10 more in 2025 and 2026. Up to now, COMAC has delivered a total of 5 C919s to China Eastern Airlines, all of which are currently on the three routes of Shanghai Hongqiao-Chengdu Tianfu, Shanghai Hongqiao-Beijing Daxing, and Shanghai Hongqiao-Xi'an Xianyang.
Air China still lost 1.674 billion yuan in the first quarter
At the same time as announcing the order for the C919 large aircraft, Air China also released a quarterly performance report. According to the data, in the first quarter of this year, Air China achieved a total revenue of 40.066 billion yuan, a year-on-year increase of nearly 60%. Air China said that the main reason is that the company actively increased investment and production, and improved revenue management capabilities, resulting in a significant year-on-year increase in operating income.
In the first quarter, Air China failed to make a profit, recording a net loss of 1.674 billion yuan, but this loss decreased by more than 1.2 billion yuan compared with the same period in 2023, and the net cash flow from operating activities was 9.4 billion yuan, an increase of 38.42% compared with the first quarter of 2023.
Jiemian News previously reported that judging from the annual performance in 2023, Air China (601111. SH), which took only one year to recover, became the least loss-making airline among the three major airlines. The net loss in 2023 will only be 1.046 billion yuan, and the total revenue will return to the scale of 100 billion yuan, reaching 141.1 billion yuan.
In addition to the accelerated recovery of the civil aviation market, Air China's major subsidiaries and joint-stock companies have also contributed a lot of strengths, such as Shandong Airlines and Cathay Pacific Airways.
From the perspective of the whole industry, according to the Civil Aviation Administration of China, the production of civil aviation transport in the first quarter of 2024 is off to a good start, with passenger traffic and cargo and mail traffic hitting the highest value in the first quarter of the previous year. The total transportation turnover of the whole industry was 34.93 billion ton-kilometers, an increase of 45.6% year-on-year and 12.9% over the same period in 2019.
Against the backdrop of rising volume and price, many airlines have achieved profitability. According to the information communication meeting of the governing units of the China Aviation Association in the first quarter, the operating efficiency of airlines improved significantly in the first quarter, achieving a profit of 2.46 billion yuan, a year-on-year decrease of 9.51 billion yuan, and 16 airlines achieved profitability.