Commercial Airline Expansion

8/6/2019 Commercial Airline Expansion

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http://www.centreforaviation.com/news/2011/01/27/new-deliveries-continue-apace-and-likely-to-accelerate-next-year/page11024h 4/16/2011

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Aircraft deliveries to accelerate in 2011. Ledby Ryanair, Air China and Turkish Airlines

27th January, 2011
http://media.centreforaviation.com/www/delivery/ck.php?oaparams=2__bannerid=347__zoneid=93__cb=0097b0f05b__oadest=http%3A%2F%2Ftwitter.com%2Fcapa_aviation


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Centre for Asia Pacific Aviation

Aircraft deliveries are set to accelerate in 2011, with more than 1,400 aircraft scheduled for

delivery this year, up from 1213 in 2010. Fleet expansion will be led by Ryanair, Air China

and Turkish Airlines, all of which will take delivery of more than 30 aircraft by the end of

2011, based on Ascend data. Asian carriers will take delivery of the most aircraft of any

region, as was the case in 2010, followed closely by Europe. LCCs and carriers in emerging

markets are driving the expansion trend.

Aircraft deliveries for 2011 by airline: Top 40^

Source: Centre forAsia Pacific Aviation & Ascend^ based on the greatest number of aircraft on confirmed delivery

1,400+ deliveries scheduled for 2011

According to IATA in its Nov/Dec-2010 Financial Monitor, released in Jan-2011, 1400+

deliveries are scheduled to the world's airlines for 2011, equating to just under 120 per month.This highlights an acceleration of the global fleet, following just under 100 aircraft deliveries per
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month in 2010. IATA added that aircraft utilisation rates are now returning to more normal levels

which will likely further push up overall rates of capacity growth in the year to come.

Airbus delivered a record 510 aircraft in 2010 and booked 644 gross and 574 net aircraft orderswhile Boeingdelivered 462 aircraft, slightly ahead of its target and reported 625 gross and 530

net orders.

See related report: Aircraft orders and deliveries review 2010 and 2011 outlook: Airbus, Boeing,

Embraer and regionals

Asian carriers to receive 32% of 2011 deliveries. Europe

31%

Asian carriers will take delivery of the most aircraft in 2011 with a 32% share of total, or 452

aircraft to be added. Europe follows closely behind with a 31% share of the 1416 aircraft

scheduled for delivery worldwide in the year.North America has a much smaller 11% share oftotal orders.

2011 aircraft deliveries due by region

Source: Centre forAsia Pacific Aviation & Ascend

North America to see reduction in deliveries in 2011 from

2010 levels. But fleet renewal ahead
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All regions are scheduled to take delivery of more aircraft in 2011 than 2010, with the exception

of North America which is scheduled to receive 157 aircraft in 2011 compared to 164 in 2010.

However, this will likely change in the years ahead, asUS carriers renew their ageing fleets andstreamline their mixed fleets often as a result of consolidation activity. North American fleets

are among the oldest in the world (at an average fleet age of 17 years), trailing only Africa andLatin America/Caribbean, but equal to Europe (which also includes developing nations in

Eastern Europe).

Average fleet age by region

Region Average Age

Africa 22

Latin America & Caribbean20

North America 17

Europe 17Middle East 16

Australasia 16

Asia 14

Source: Centre for Asia Pacific Aviation and Ascend Based on Jan-2011 data

In mid Jan-2011, Delta Air LinesCEO Richard Anderson stated the carrier plans to order 100 to

200 narrowbody aircraft with options for a further 200 aircraft in an agreement that may become

the largest in commercial aviation history (currently Jan-2011's MoU by IndiGo Airlines for 180aircraft). A request for proposals went to several manufacturers in Dec-2010 and deliveries to

Delta may commence as soon as 2013.

Meanwhile, Virgin America in mid Jan-2011 announced a firm order for 60 new A320 aircraft to

be delivered 2013 to 2016, including 30 of the A320neo the first commercial order for the neweco-efficient engine option. This formalises and expands an initial commitment made at the

Farnborough International Airshow in Jul-2010. With this order and growth from other sources,

Virgin America's fleet will more than triple, from 34 to 111 aircraft by 2019.

Meanwhile, Africa and Australasia will see the largest growth in fleet from 2010 to 2011: Africadeliveries will increase from 56 in 2010 to 93 in 2011 (for growth of 166%) while Australasian

deliveries will total 51 in 2011, up from 34 in 2010 (growth of 150%).

Aircraft 2010 deliveries and 2011 deliveries due by region
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Source: Centre for Asia Pacific Aviation & Ascend

Meanwhile, Middle Eastern carriers have significant fleet orders in the next few years. Emirates

has the largest order book for widebody aircraft in the world and will require more than USD28billion in financing through to 2017 -nearly twice the amount it raised since 1996. Airbus and

Boeing together have outstanding orders for 137 aircraft fromQatar Airways, 103 from Etihad

Airways and 200 from Emirates, according to Ascend.

Large number of aircraft orders creating large financing

requirements

As always, aircraft financing remains a key concern for airlines, with many airlines havingsignificant financing requirements.

Emirates, which has 12 confirmed deliveries for aircraft in 2011 and a total of 203 aircraft on

order, this month stated it had raised USD4.6 billion in aircraft financing over the past two years

amid tight lending conditions following the global downturn. The Dubai-based airline hassuccessfully lined up credit to finance 30 widebody aircraft delivered during the period.

Emirates, which will take delivery of two aircraft per month on average over the next six years,

is reportedly seeking to borrow USD1 billion through a revolving- credit facility at present.

The issue of export credit financing

Emirates has been forced to hit back at itsEuropean rivals who are claiming the region's airlines

have expanded through global subsidy. The overall share of aircraft deliveries covered by

government guarantees more than doubled to 34% in 2009, according to Airbus and Boeing.AirFrance has stated the USExport-Import Bankarranged USD2.3 billion worth of financing
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agreement to Middle East airlines, a 200% increase from 2006 as export credit agencies stepped

up assistance to foreign airlines during the global financial crisis. More than 100 airlines receive

this sort of funding.

According to Emirates, in its "Subsidiary Myths and Facts" document, of the USD22 billion in

aircraft financing over the past 14 years, 13% (or USD2.9 billion) has come from US ExImfinancing, with EU ECAs contributing 10% of the total financing amount (or USD2.3 billion),

and that this ratio was likely to remain in this range in the future, according to the carrier. USExport-Import Bank Chairman and President Fred Hochberg similarly commented that about

20% of the Emirates and Etihad fleets has been provided by export credit agencies both in

Europe and the US. He continued: Some airlines have used us to a lesser extent and many haveused us to a far greater extent.

Emirates aircraft funding: Sources of financials over the past 14 years

Source: Emirates in its Subsidy. The myths and facts about Emirates and our industry Document

Also in the Middle East, Etihad has issued requests for proposal (RFPs) to finance seven aircraft

for delivery this year. The carrier plans to nearly triple its fleet within 10 years, will require

USD13.3 billion from financial institutions.

IPOs on the rise

Other carriers and/or lessors, such asAir Nostrum,Lion Air,AerCap and Air New Zealand, have

recently secured ECA financing for their aircraft. Air Nostrum secured financing for five

Bombardierregional jets with ECA funded Spanish operating leases (SOLs), the first ECA SOLsarranged for regional aircraft. AerCaphas mandated Citi for the export credit guaranteed

financing of three A330-300s while Lion Airclosed ECA financing for first of six ATR72-500s,

for operation by its subsidiary, Wings. AirNew Zealand, also in Jan-2011, secured a USD170

million term loan backed by US Export-Import Bank.
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Meanwhile, a number of carriers that have large aircraft orders, such as Flybe and Garuda, have

conducted or are conducting IPOs, to help diversify funding sources as the economic

environment and equity market conditions strengthen.

Global airline share prices rose strongly during 2010, on aggregate ending the year up 28% over

the 12 months, according to IATA. Share prices for US airlines were up more than 31% over thisperiod, those in the Asia Pacific by 27% and European airlines by 21%. These are much greater

rises than the 12% seen in the broader market Global All-Cap index, indicating that financialmarkets are taking a positive view on airline financial prospects.

Bloomberg Airlines Index: Jun-2005 to Dec-2010

Source: IATA sourcing Bloomberg

A number of other carriers are also considering listing. IndiGo, for example, is considering an

IPO to finance its recent USD15.6 billion aircraft order with Airbus for 180 A320s, while GoAir,also in the Indian market, is similarly planning an IPO to fund its fleet expansion. Meanwhile,

AirAsia X is planning a European and Asian listing to fund its fleet expansion, with the carrier

planning to triple its fleet to 35 aircraft over the next six years. Mesxico's InterJet and China's

Spring Airlines are also considering IPOs in the next couple of years.

Many full-service carriers have shored up their balance sheets by a mixture of institutionalcapital raisings and stock issuances, as well as securing large amounts of reasonably inexpensive

debt amid the global financial downturn. In 2011, a number of carriers, such as US Airwaysand

UnitedContinental, have announced aircraft financing plans through the offering of bonds, notesand/or trust certificates.
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Ryanair the worlds largest international carrier keeps on

getting bigger

Ryanair, already by far Europes biggest LCC and the largest international carrier in the world,

has 39 aircraft scheduled for firm delivery in 2011. The carrier plans to increase its fleet from256 B737-800s to 299 of the aircraft type by Mar-2013.

The carrier handled a record 72 million passengers in 2010, representing growth of 10% from2009 levels. Despite growth expected to slow to the single-digits in the years ahead, Ryanair is

continuing its growth trajectory, at least over the next couple of years. The carrier expects to add

6.5 million passengers in FY2012 and 5.0 million passengers in FY2013, representing fleet and

traffic growth of 28% by 2013.

Ryanair fleet and passenger growth

FY to Mar Total fleet DisposalsPax traffic Pax growth2010 232 -3 66.5m +14%

2011 272 -10* 73.5m +11%

2012 294 -3* 80.0m +9%

2013 299 -10* 85.0m +6%

Source: Centre for Asia Pacific Aviation & Ryanair

* 2011 to 2013 23a/c disposals (17 Op. leases and 6 a/c sales)

Chinese airlines in golden era for aviation. China to have

highest number of deliveries in 2011

Air China, one of the "big three" Chinese carriers, has 35 aircraft scheduled for delivery in 2011,while its Shenzhen Airlinessubsidiary has 19 aircraft scheduled for delivery this year. Air China

is benefiting from the booming local economy and the population's rising propensity to travel.

This has resulted in what many industry participants see as the beginning of a golden era forChinese aviation.

See related report: Chinese aviation industry generates record profits in 2010. Golden era

ahead?

Air China fleet and fleet plan: as at 30-Sep-2010
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Source: Air China

*Note: wet lease aircraft excluded in calculation of average ages

Shenzhen Airlines fleet and fleet plan: as at 30-Sep-2010

Source: Air China

Chinese airlines occupy nine of the Top 50 spots globally for total aircraft scheduled for delivery

during 2011 - more than any other country. Hong Kong-based Cathay Pacificalso ranks in the

Top 20. USA has seven airlines in the top 50 spots, followed by Germany(3), Russia(3), Japan(2), India (2) and Brazil(2).

In Jan-2011, CAAC Vice Director Wang Changshun stated Chinese carriers would introduce 290

new aircraft and retire 67 aircraft, for a net increase of 223 aircraft this year, 13.9% more than

2010. Mr Wang added that the CAAC would support fleet renewal plans, but urged airlines toadjust fleet capacity to market demand. Chinas aviation industry introduced 187 new aircraft in

2010, 40 less than initially forecast, for a total fleet of 1604 at the end of 2010.
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Turkish Airlines to increase capacity by 29% in 2011. To

add 32 aircraft to support growth

In Europe, fast-expanding Turkish Airlines has 32 aircraft on order for delivery in 2011. The

carrier expects a 20% increase in passenger demand and a 29% capacity increase in 2011 andplans to add at least 11 new destinations to its network. Long and medium-haul operations

remain the carriers priority, as well as increasing destinations to Europe.

The carrier expects to handle 35 million passengers in 2011, a third of them transit passengers,

up from a total of 29.1 million in 2010.

During 2010, Turkish Airlines fleet reached 153 aircraft, with an average age of 6.5 years. 11%

of the aircraft are owned, 49% are operating under financial lease and 41% under operatingleases. The carrier, in its Dec-2010 investor updated, released the following fleet and capacity

plans for the next five years:

2010: 153 aircraft with seat capacity of 27,891 seats;

2011: 175 aircraft with seat capacity of 31,911 (+14.7% year-on-year);

2012: 186 aircraft with seat capacity of 34,127 (+6.7%);

2013: 197 aircraft with seat capacity of 36,042 (+5.6%);

2014: 201 aircraft with seat capacity of 36,790 seats (+2.1%);

2015: 196 aircraft with seat capacity 36,100 (-1.9%).

Turkish Airlines fleet: Dec-2010

Source: Turkish Airlines4 Shorterm leased aircraft not included


12/15

ANA and Alitalia also rank in Top 5

Rounding out the global Top 5 is ANA, which has 28 aircraft scheduled for delivery in 2011

(including 15 B787s, although this number is expected to be reduced by further productiondelays).

ANA is aiming to fill the gaps created by JALs network restructure and downsizing as part of its

bankruptcy rehabilitation, while seizing growth opportunities created by airport expansion in

Tokyo. ANA, which has become the largest carrier in the Japanese market, operated a fleet of228 aircraft at the end of 2010.

ANA fleet as at 31-Dec-2010

Source: ANA

The number of aircraft actually delivered to ANA in 2011 could be under 20. ANA has

confirmed it would receive at least nine new aircraft in 2011 (four B767-300ERs, two B737-800s

and three DHC8-A400s) in addition to the B787 deliveries and retire nine aircraft (one B767-300, four A320s-200s, two B757-500s and two DHC8-Q300s) as it proceeds with plans to

replace older aircraft, beginning with the retirement of the B767-300 on domestic routes.

Retirement of the DHC8-Q300 will also commence and a gradual consolidation of aircraft to theDHC8-Q400 model will be implemented for propeller aircraft.

In Jan-2011, ANA commented that preparations are under way for the commencement of flights

using the B787. Until then, more B767-300ERs will be added on international routes and B787-800s on domestic routes. The carrier stated "work is being done to secure production volume to

meet the recent increase in demand".

Meanwhile, Alitalia has 26 aircraft expected for delivery in 2011, including 20 A320s and sixA330s. With the addition of three new A320s in Dec-2010, the carrier has taken delivery of 21new aircraft since Jan-2009, including two A330s for long-haul operations. The renewal plan of

the Airbus fleet for medium and long haul operations will continue in 2011. The carrier had a

total operating fleet of 150 aircraft at the end of 2010.

Rounding out the Top 10 are easyJet (24), China Southern (22), AirFrance (20),Lufthansa (20),LAN (19) and Moska Air Company (19).
http://www.centreforaviation.com/profiles/airlines/all-nippon-airways-nhhttp://www.centreforaviation.com/profiles/airlines/alitalia-azhttp://www.centreforaviation.com/profiles/airlines/japan-airlines-jlhttp://www.centreforaviation.com/profiles/airlines/easyjet-u2http://www.centreforaviation.com/profiles/airlines/china-southern-airlines-czhttp://www.centreforaviation.com/profiles/countries/francehttp://www.centreforaviation.com/profiles/airlines/lufthansa-lhhttp://www.centreforaviation.com/profiles/airlines/lufthansa-lhhttp://www.centreforaviation.com/profiles/airlines/lan-airlines-lahttp://www.centreforaviation.com/profiles/airlines/all-nippon-airways-nhhttp://www.centreforaviation.com/profiles/airlines/alitalia-azhttp://www.centreforaviation.com/profiles/airlines/japan-airlines-jlhttp://www.centreforaviation.com/profiles/airlines/easyjet-u2http://www.centreforaviation.com/profiles/airlines/china-southern-airlines-czhttp://www.centreforaviation.com/profiles/countries/francehttp://www.centreforaviation.com/profiles/airlines/lufthansa-lhhttp://www.centreforaviation.com/profiles/airlines/lan-airlines-la


13/15

Outlook: BRIC and LCCs continue to expand

LCCs and carriers in the emerging BRIC Brazil, Russia, India and China will continue to

drive fleet (and capacity and network) growth in 2011, based on the number of aircraft onconfirmed delivery for the year. Other key regions and economies seeing rapid growth prospects

such as Turkey and Latin America are also boosting their fleets.

There were 14 LCCs among the Top 50 carriers by fleet orders for 2011, led by Ryanair (39),

easyJet (24), Azul (17), airberlin (16) and IndiGo (14). Meanwhile, there were 16 carriers fromBRIC nations in the Top 50 list, led by Air China (35), China Southern (22), Moskva Air

Company (19), Aeroflot(18), Azul (17) and China Eastern (17).

Carriers from other emerging markets such as Turkey,Indonesiaand Latin America, such as

Turkish Airlines (32), LAN (19) and Garuda Indonesia (14), Lion Air (13) and Copa(14) arealso expanding rapidly in 2011 while a number of the major network carriers continue to acquire

aircraft as they add capacity back into their network in 2011 and replace their ageing fleets.

APPENDIX:

Top 2011 aircraft deliveries by carrier^

Operator 2011 deliveries

1 Ryanair 39

2 Air China 35

3 Turkish Airlines 32

4 ANA 28

5 Alitalia 26

6 easyJet 24

7 China Southern 22

8 Air France 20

9 Lufthansa 20

10LAN Airlines 19

11Moskva Air Company 19

12Aeroflot Russian Airlines 18

13Azul 17

14China Eastern 1715Korean Air 17

16airberlin 16

17CathayPacific 16

18American Airlines 15

19JAL 15

20QatarAirways 15
http://www.centreforaviation.com/profiles/countries/turkeyhttp://www.centreforaviation.com/profiles/airlines/azul-adhttp://www.centreforaviation.com/profiles/airlines/airberlin-abhttp://www.centreforaviation.com/profiles/lessors/moskva-air-companyhttp://www.centreforaviation.com/profiles/lessors/moskva-air-companyhttp://www.centreforaviation.com/profiles/airlines/aeroflot-suhttp://www.centreforaviation.com/profiles/airlines/aeroflot-suhttp://www.centreforaviation.com/profiles/airlines/china-eastern-airlines-muhttp://www.centreforaviation.com/profiles/countries/indonesiahttp://www.centreforaviation.com/profiles/countries/indonesiahttp://www.centreforaviation.com/profiles/countries/indonesiahttp://www.centreforaviation.com/profiles/airlines/garuda-indonesia-gahttp://www.centreforaviation.com/profiles/airlines/copa-cmhttp://www.centreforaviation.com/profiles/airlines/copa-cmhttp://www.centreforaviation.com/profiles/airlines/lan-airlines-lahttp://www.centreforaviation.com/profiles/airlines/krasair-7bhttp://www.centreforaviation.com/profiles/airlines/aeroflot-suhttp://www.centreforaviation.com/profiles/lessors/korean-airhttp://www.centreforaviation.com/profiles/airlines/cathay-pacific-airways-cxhttp://www.centreforaviation.com/profiles/airlines/cathay-pacific-airways-cxhttp://www.centreforaviation.com/profiles/airlines/american-airlines-aahttp://www.centreforaviation.com/profiles/countries/qatarhttp://www.centreforaviation.com/profiles/countries/turkeyhttp://www.centreforaviation.com/profiles/airlines/azul-adhttp://www.centreforaviation.com/profiles/airlines/airberlin-abhttp://www.centreforaviation.com/profiles/lessors/moskva-air-companyhttp://www.centreforaviation.com/profiles/lessors/moskva-air-companyhttp://www.centreforaviation.com/profiles/airlines/aeroflot-suhttp://www.centreforaviation.com/profiles/airlines/china-eastern-airlines-muhttp://www.centreforaviation.com/profiles/countries/indonesiahttp://www.centreforaviation.com/profiles/airlines/garuda-indonesia-gahttp://www.centreforaviation.com/profiles/airlines/copa-cmhttp://www.centreforaviation.com/profiles/airlines/lan-airlines-lahttp://www.centreforaviation.com/profiles/airlines/krasair-7bhttp://www.centreforaviation.com/profiles/airlines/aeroflot-suhttp://www.centreforaviation.com/profiles/lessors/korean-airhttp://www.centreforaviation.com/profiles/airlines/cathay-pacific-airways-cxhttp://www.centreforaviation.com/profiles/airlines/american-airlines-aahttp://www.centreforaviation.com/profiles/countries/qatar


14/15

21Xiamen Airlines 15

22Garuda Indonesia 14

23IndiGo Airlines 14

24UPS Airlines 14

25Air Nostrum 1326KLM Royal Dutch Airlines 13

27Lion Air 13

28Norwegian 13

29Southwest 13

30Tianjin Airlines 13

31Emirates Airline 12

32Hainan Airlines 12

33Malaysia Airlines 12

34US Airways 12

35Continental 11

36Lufthansa CityLine 11

37Niki 11

38Saudi Arabian Airlines 11

39Sichuan Airlines 11

40Virgin Blue Airlines 11

41Copa Airlines 10

42FlyDubai 10

43Polet 10

44SpiceJet 1045TAM Linhas Aereas 10

46WestJet 10

47Frontier Airlines 9

48JetBlue Airways 9

49Okay Airways 9

50Shenzhen Airlines 9

Source: Centre for Asia Pacific Aviation & Ascend

^ based on the greatest number of aircraft on confirmed delivery

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