Fleets, financing and fares are all under review as airlines in the most troubled parts of Asia look for ways to weather the financial turbulence.
Boeing predicts that Asian customers could delay up to 60 aircraft deliveries over the next three years. Asian airlines have placed firm orders for Boeing and Airbus aircraft worth some US$30 billion.
While the agreed deferrals have so far been relatively modest, they represent only the start of a broader cutback. To date Asiana has deferred two Boeing 777s while Cathay Pacific has deferred options on 16 Boeing and nine Airbus widebodies. But Malaysia Airlines, Philippine Airlines, and Thai Airways are all talking with aircraft manufacturers about more substantial delivery delays. PAL says it will cancel at least four firm 747-400 orders, while Asiana has shelved plans to order five more aircraft this year.
Some Asian carriers are trying to lease out new aircraft due for early delivery. Malaysia Airlines has been talking with carriers such as Delta Air Lines about taking over four 777s which MAS is committed to buy this year. Several carriers are also mining their current fleets for cash. Korean Airlines and Asiana have sold and leased back 11 widebodies. Asiana hopes to raise another $300 million this year from sale-leasebacks.
Asian carriers are also resorting to the time-honoured technique of raising cash by outright fleet sales. But while aircraft retirements may be routine, the current rate of transactions is not. Malaysia Airlines is selling a DC-10, A300B4, and six 737-500s to help finance new deliveries. The move follows its decision last December to shelve a proposed share offering. Asiana is advertising three 767-300ERs and two 747-400s for sale. Garuda Indonesia, under pressure from Jakarta to sell off assets, hopes to divest four DC-10s, four 747s, and five A300B4s this year.
Garuda's cash crunch exposed it to late charges when it missed $8 million in A330 lease payments due in December. Aware that Garuda was unable to self-finance a batch of 737s for delivery, the government has provided the sovereign guarantee needed by the US Eximbank to lend funds to Garuda to complete the purchase. Five of the 17 Boeing aircraft have arrived.
The devaluation of Asian currencies is also throwing into question whether fares should be quoted in local currencies or US dollars. In Thailand, foreign airlines sought government approval to switch from outbound fare quotes in baht to US dollars. But Thailand's transport minister saw dollar-priced fares as insulting to Thais. As a compromise, foreign airlines have been allowed to double fare limits, so long as they keep fare quotes in baht. Most airlines planned to raise overseas fares by 10 to 20 per cent in early February.
David Knibb
Source: Airline Business
