China's Shandong Airlines orders 50 Boeing planes for $4.6 bn

Beijing: Shandong Airlines, one of China's smaller carriers, said it has agreed to buy 50 passenger planes from US manufacturer Boeing for $4.6 billion, in another sign of the country's growing demand for air travel.

The company signed an agreement with Boeing on Monday to purchase 16 Boeing 737-800s and 34 Boeing 737 MAX planes, a statement said, in a drive to grow its fleet for future business expansion.China's commercial airline industry is dominated by the "Big Three" -- flag carrier Air China, China Eastern Airlines and China Southern Airlines, but a move towards greater competition has seen the growth of smaller players.

The order represents a win for Boeing in the giant Chinese market and a vote of confidence in its newest family of single-aisle planes, the 737 MAX, which promises greater fuel efficiency. The manufacturer will begin deliveries of the 737 MAX to global customers beginning in 2017, according to Boeing's website.

Shandong Airlines aims to increase its fleet to more than 140 aircraft by the end of 2020, roughly doubling its total stock of planes, China's official Xinhua news agency late Monday quoted an airline official as saying. ‘It already operates 67 Boeing 737 planes’, said Xinhua.

The airline, based in the eastern province of Shandong, will receive the aircraft in batches between 2016 and 2020, the statement said. Shandong Airlines, established in 1994, is controlled by the Shandong Aviation Group which is backed by several government shareholders including Air China and the Shandong Economic Development and Investment Co.

Stock investors cheered the plane order. Shandong Airlines, which is listed on China's Shenzhen stock exchange, was up 3.54 percent by midday on Tuesday. Fierce rivals Boeing and European consortium Airbus have locked horns in a battle for lucrative orders in China, which is seeing a rapidly expanding domestic carrier sector.

While slow growth in Western economies is hitting the aviation industry, Asian countries are booming with an emerging middle class keen to take to the air. Boeing also said that it expects China's commercial aircraft fleet to triple in size over the next two decades as the country's strong economic growth boosts air traffic.China will need 5,580 new airplanes worth $780 billion by 2032, it said. Boeing in 2012 overtook Airbus for the first time in 10 years as the world's biggest plane maker in terms of aircraft delivered.

In September last year it finalised an order with China's Xiamen Airlines of six Boeing 787 Dreamliners, worth about $1.3 billion at list prices. In March 2013, it signed a deal with Air China for 31 passenger and cargo planes, a deal worth $5.2 billion at Boeing list prices at the time.