(Bloomberg) -- Hainan Airlines Co. is set to place an order with Boeing Co. for 30 787-9 Dreamliner planes valued at $7.7 billion, as China's fourth-largest carrier pushes forward with a bold plan for international expansion.
The airline will take delivery of the first of the larger 787s by 2021, it said in a Shanghai exchange filing Wednesday. The deal would add to Hainan's current Dreamliner fleet of nine and would be the biggest Dreamliner transaction for Boeing since 2013, when it formally unveiled the 787-10, the largest of its three models.
Chinese carriers are bringing in more orders for Boeing and France's Airbus Group NV as growth in the world's second-largest economy enables more people to fly. Hainan Air is looking to expand its international network to tap growing Chinese travel demand as it adds to its North American and European destinations.
"They will need this for their long haul flights," said Li Xiaolu, a Shanghai-based analyst with Capital Securities. "Because the deliveries are stretched over the next 10 years or so, this order isn't as aggressive as it looks."
Hainan Air shares fell 1.1 percent to 4.50 yuan in Shanghai trading at 10.16 a.m. local time. The carrier, based in the southern Chinese island of the same name, reported March 26 that 2014 net profit rose 20 percent to 2.6 billion yuan from a year earlier.
More Flights
Hainan Air will start service this year to Tel Aviv and San Jose from Beijing, and to Boston and Seattle from Shanghai. It also will start Chongqing-Rome flights from late April. The carrier will increase the frequency of its Beijing-Boston flights.
About 48 percent of Hainan's international seats are to Western Europe and North America, a difference from the three state-owned Chinese airlines, which typically have more short-haul regional seats than long-haul, CAPA Center for Aviation said in a note last October.
The carrier did not say how it plans to finance the agreement for the Dreamliner jets. The 787-9 is priced at $257.1 million each, and airlines typically negotiate volume discounts.
"We don't comment on conversations with our customers," Doug Alder, a Boeing spokesman, said by e-mail.
China is on pace to surpass North America as the biggest air-travel market within the next two decades, according to Boeing's forecast.
The Chicago-based planemaker said last year it expects Chinese customers to order 6,020 aircraft over the next two decades, worth about $870 billion. Last September, Boeing said orders from China in the first eight months of 2014 had already exceeded the total for full-year 2013.
Already Substantial
The Asia-Pacific region already is a substantial market for large jetliners, accounting for 50 percent of global deliveries, Noah Poponak, a New York-based analyst with Goldman Sachs & Co., said in a Feb. 23 report.
The 787 is the first jetliner built from carbon-fiber strands instead of the traditional aluminum, and made its commercial debut with the 787-8 variant in 2011. The bigger 787-9 typically seats 280 people, according to Boeing.
The Hainan deal will bolster sales of Boeing's marquee jet, which has only netted one order in 2015, according to the Chicago-based planemaker's website.
Boeing has 467 orders for the -8, the smallest Dreamliner; 466 total sales of the -9 model and 139 orders for the -10, according to the company's website.
Source: Bloomberg News by Julie Johnson, Zhe Huang and Clement Tan
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