China Eastern Raises Capital for Fleet Expansion

LONDON – China’s Sky Team giant gears up for new rounds of funding to expand its fleet in order to increase its competitiveness in the domestic Chinese market, which is one of the fastest-growing aviation markets in the world.

China Eastern Airlines is raising capital to fund its ambitious plans to acquire 38 new aircraft. Unsurprisingly, the airline looks into aircraft from COMAC (Commercial Aircraft Corporation of China) ARJ21s and C919s.

Airline Focuses on Stock Exchange to build additional funds

According to a filing on the Shanghai Stock Exchange, the airline is planning to raise up to 15 billion yuan ($2.23 billion) in a share sale to acquire new aircraft. Despite the impressive figures in fundraising, the airline reported a first-quarter net loss of 7.8 billion yuan due to the impact of COVID-19 and the increase in oil price.

China Eastern is looking to replace ageing aircraft with modern ones, to increase its competitiveness and brand image amid a very competitive aviation landscape in China. This round of aircraft acquisition will allow the airline to reduce the average aircraft age, as its fleet of 758 passenger aircraft had an average age of 7.7 years as of December last year.

The airline says that the Chinese market still has lots of potentials to grow despite being one of the largest aviation markets in the world. With rising middle-class incomes and the growing purchasing power of many Chinese, the domestic market is poised to grow even further. This is why the current round of funding is essential for the airline to maintain its market share.

Home Built Aircraft To Help China’s Aviation Growth Demands

The airline says it plans to purchase four Chinse-made Comac C919s, 24 Comac ARJ21-700s, six Airbus A350-900s, and four Boeing 787-9s, with a total listing price for these aircraft approximately around $4.38 billion dollars. 

The price list per aircraft is as follows:

  • Comac C919 is listed at $99 million 
  • Comac ARJ21-700 is listed at $38 million
  • A350-900 $317 million 
  • 787-9 $293 million 

List Prices Accurate at the time of publishing

These aircraft will be funded by the capital funds that the carrier is trying to raise. 10.5 billion yuan of the raised 15 billion will be set aside to acquire 38 new aircraft, and the remainder will be used for operational use or working capital. 

The airline further commented about the hefty $4.38 billion price tag for the latest round of shopping spree, and that it has received discounts. 

It has also been reported that the airline will be the launch customer of the homegrown COMAC C919 aircraft. It is no secret that Chinese Eastern, a major Chinese airline, is supporting the local aviation industry and that it is betting its narrow-body aircraft solely on Chinese-made airplanes.

While long-haul services are still served by the western made Boeing and Airbus widebodies, the question now is, will other major Chinese airlines start to follow suit in making the change to utilising the Comac for their long haul services?

For now, it looks like in the narrow-body segment, Chinese airlines are obliged to support the COMACs and the ARJs, while the long-haul aircraft are still dominated by Boeing and Airbus. 

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