China Southern, Xiamen commit to big Boeing 737 purchase

Two Chinese airlines plan to purchase 110 Boeing 737s worth nearly $12 billion.

China Southern Airlines has committed to purchase 80 Boeing 737s, according to a statement from Boeing. The commitment is for 30 Next Generation 737s and 50 737 Max airplanes, in a deal that at list prices is valued at $8.38 billion, Boeing said.

Xiamen Airlines, which is 51 percent owned by China Southern, also plans to buy 30 737 Max airplanes. That deal, at current list prices, would be valued between $2.7 billion and $3.5 billion, depending on which of the four 737 Max model types Xiamen acquires.

Large deals such as these also typically include discounts.

Spirit AeroSystems in Wichita manufactures 70 percent of the 737, including Next Generation and Max.

Separately, RBC Capital Markets analyst Robert Stallard said in a note to investors Thursday morning that China Southern plans to return some of its older narrow-body fleet to Boeing.

“Interestingly, it will sell 13 757s and 3 737-300s back to Boeing, representing about 2% of its fleet in terms of seats, although its not clear as to the timing,” Stallard wrote.

In November, the International Air Transport Association forecast that China will lead the world in airline passenger growth in the next two decades. IATA projects China will add 758 million new passengers for a total of 1.196 billion over the 20-year period.

Boeing forecasts the country will need 6,330 new airplanes worth an estimated $950 billion over the next two decades.

State-owned China Southern is the country’s biggest airline by passengers and fleet size.

This story was originally published December 17, 2015 at 10:17 AM with the headline "China Southern, Xiamen commit to big Boeing 737 purchase."