Deal Follows US/China Aviation Pact Finalization

In a deal estimated to be worth $3.69 billion, China Southern Airlines has committed to a purchase of 45 aircraft from manufacturing rivals Airbus and Boeing. 

The carrier announced Tuesday it would buy 25 B737-800s from Boeing and 20 A320s from Airbus.

The B737-800s are slated for Xiamen Airlines, in which China Southern owns a 60 percent stake, and are scheduled for delivery between 2011 and 2013. The carrier expects deliveries of the A320s between March 2009 and August 2010, according to the Xinhua China View.

The carrier said financing for the purchase would occur through its own capital and bank loans even though no such banking deals have been made as of yet.

Current market prices for the Boeing aircraft are around $70 million to $79 million and the A320 prices come in around $66 million to $85 million, but the carrier said it had received discounts on the large orders.

This purchase should increase the carrier's operating capacity by about 19.5 percent, the carrier said.

News of the purchase comes on the heels of the US and China finalizing an aviation pact that is expected to lead to a massive increase in air traffic, according to the BBC.

The pact, signed by US Transportation Secretary Mary Peters and China's civil aviation minister Yang Yuanyan in Washington Monday, allows US carriers to operate 23 daily flights by the year 2012, an increase from the current 10. Chinese carriers may operate equivalent services, as well as unlimited cargo flights from both sides.

The deal is projected to generate as much as $5 billion for the airline industry, said the BBC.

FMI: www.airbus.com, www.cs-air.com/en/