Cathay Pacific to take delivery of used 777s
Cathay Pacific will start taking delivery of 5 used Boeing 777-31H from Emirates by early April. (Boeing assigns a unique code for each company that buys one of its aircraft, which is applied as an infix to the model number at the time the aircraft is built, hence "777-31H")
According to sources, the used 777-300s were produced during 2002-2003, which have an average age of 15-16 years. During its service with Emirates, the triple sevens are being used on medium haul routes, mainly from their Dubai hub to Japan and Singapore. All 5 remaining Boeing 777-200s in Cathay Pacific’s fleet will be scrapped after the arrival of these aircraft.
Shall those second hand 777s be fitted with Cathay Pacific’s configuration, there will be a 8 percent increase in regional economy capacity after the 200s are replaced by 300 series. Business class capacity for regional routes will remain the same as both the 200s and 300s are fitted with 42 recliner seats (to many surprise Cathay does not offer full-recline seats on their regional fleet)
However, this doesn’t mean that those Emirates 777s will be used on Cathay services immediately after arrival. It will be refurbished with seats and livery of Cathay Pacific before entry into service during the summer peak season.
Unfortuantely, Cathay Pacific has to dismantle their Boeing 777-200s, which has an average age of 22 years old. Those planes are to be scrapped through AerFin Ltd, a UK company working out of a facility in Tarbes Airport at Southwest of France. Former Cathay Pacific’s Airbus A340s are being recycled in the exact airfield a few years ago also.
Airlines like Cathay Pacific considers the aircraft basic price to decide whether to purchase second hand aircraft or new ones. Aircraft basic price comprises the airframe price, optional features prices, and engine price.
It is apparent that Emirates has granted Cathay Pacific significant price concessions on the 5 777-300s. Such price concessions were determined after arm’s length negotiations between the parties and as a result, the actual consideration for the used Boeing 777-300 is lower than the aircraft basic price. The Transaction was negotiated and entered into in accordance with customary business practice. It is reasonable for Cathay Pacific to purchase used 777s instead of new ones. Firstly the purchase cost is significantly reduced when compared to purchasing new 777s, where the aircraft basic price of the a new Boeing 777-300 is approximately US$2.711 billion (equivalent to approximately HK$21.146 billion). Secondly as Emirates keeps good maintenance of their fleet, maintenance cost for those second hand planes are still reasonable. Retiring the 200 series can achieve fleet simplification among Cathay Pacific and save costs.
The transfer of 5 Boeing 777-300s to Cathay Pacific means that Emirates will be phrasing out all of its non ER 777s in the coming months. Since August 2017, Emirates has retired 3 777-300 aircraft, however a total of 4 are listed as retired due to A6-EMW being written off. One of the 777-300 airframes is now operating as VP-BSF for VIM Airlines, it was previously registered as A6-EMS while still being an active part of the Emirates fleet.
Having a look in the regional fleet of Cathay Pacific group (click in for full image), narrowbody jets formed the mainline fleet. Cathay Pacific Airways also holds 30 Airbus A330-300s fitted in new regional class cabin on medium haul routes to popular tourist attractions. They are supplemented by the 24 A330s from Cathay Dragon on secondary cities with relatively high demand or low competition. Note that Cathay Dragon, or previously as Dragonair, is a Hong Kong-based international regional airline. Also, the graph titled "Cathay Pacific Group regional fleet" includes the 5 Emirates 777-300s which are to be delivered in this few months.
Cathay Pacific Group's direct competitor Hong Kong Airlines (and HK Express, which is a low cost subsidy of HK Airlines) has 20 Airbus A320-200, 5 A320neo and 9 A321-200 in its fleet. Hong Kong Airline’s regional network is supplemented by its fleet of Airbus A330-300.
Based on the current situation, Cathay Pacific group is taking a lead in terms of regional air traffic capacity. Hong Kong Airlines has been focusing on expanding long haul services since the arrival of their Airbus A350-900 and new A330-300s. Hong Kong Airlines’ CEO has stated that they will not be committing to order more Airbus A320s in this decade. Hong Kong Express, the low cost subsidy of Hong Kong Airlines, will be receiving 7 more A320neos and 3 A321neos by 2020. Through replacing the 777-200s with the 300 series, Cathay Pacific will be able to boost its regional network.
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