LONDON: A major airline company has entered into a significant agreement with the Commercial Aircraft Corporation of China (COMAC) to purchase 100 of the much-anticipated C919 aircraft (Extended-ranged Version).

This transaction is set to reshape the future of aviation with the C919 being a direct competitor to the likes of Boeing and Airbus.

The deal, which surpasses the 25% threshold under Rule 14.07 of the Listing Rules, is classified as a major transaction, necessitating shareholder approval and adherence to stringent reporting and announcement requirements. A detailed circular is slated for distribution by June 25, 2024, providing shareholders with comprehensive information on the acquisition.

The basic price of the fleet, as per COMAC’s latest catalogue, stands at approximately $10.8 billion, with the actual consideration being significantly lower due to substantial price concessions secured through rigorous negotiations. The directors have assured that the concessions are in line with industry norms and previous transactions, and will not materially affect the operating costs of the airline’s fleet.

The airline anticipates a phased delivery of the aircraft from 2024 to 2031, with payments structured in instalments. Funding for the acquisition will be sourced from the company’s cash reserves, bank loans, and other financial instruments, ensuring minimal impact on cash flow and operations.

This acquisition aligns with the company’s development strategy and market demand, aiming to optimize fleet structure and bolster long-term capacity. The addition of the C919s is projected to increase the group’s fleet capacity by approximately 7.5%, factoring in the available tonne kilometers as of December 31, 2023. The new aircraft will also cater to the renewal needs of the aging fleet, ensuring a balanced net increase in capacity.

The board of directors affirms that the purchase agreement adheres to standard commercial practices and is both fair and beneficial for the company and its shareholders. This move marks a significant step in the airline’s growth and its commitment to modernizing its fleet with state-of-the-art aircraft.

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