China Southern Airlines Co. Ltd. (NYSE: ZNH) announced Wednesday morning that it had signed an agreement with Airbus to purchase 10 A330-300 airplanes that carry a list price of about $227.4 million each. According to the airline’s disclosure statement, the actual price is “significantly lower … because of the substantial price concessions” agreed to by Airbus.
Last week Boeing Co. (NYSE: BA) said that China Southern had committed to purchase 50 current-model 737s and 30 of Boeing’s new 737 MAX airplanes. Xiamen Airlines, a unit of China Southern, has also committed to buy 30 new 737 MAX jets in a deal that could be worth more than $10 billion at list prices, if it is confirmed. All things considered, Boeing may have preferred to take a firm order for 10 wide-bodies.
Earlier this month we noted that Airbus has taken net new orders for 127 wide-body planes in 2015, compared with net new orders of 113 for Boeing wide-bodies. Boeing’s single biggest issue here is a lack of new orders for its current model of the 777 twin-engine wide-body. The company has taken orders for just 38 of the planes so far in 2015, against a target of 40 to 60 new orders.
The problem is exacerbated by rock-bottom prices for used 777s. Delta Air Lines said last week that it paid just $7.7 million for a used 777-200ER. Ten years ago that plane cost $170 million new.
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