UPDATE 1-HK Airlines to delay Boeing delivery

Wed Aug 15, 2012 7:31am EDT

* Says operating one brand of aircraft will lift efficiency

* H1 net profit down about 50 pct on year

* Company focusing on regional and China routes

* No decision on fate of A380 order

By Alison Leung

HONG KONG, Aug 15 (Reuters) - Hong Kong Airlines plans to replace a number of Boeing planes with Airbus jets and delay delivery of six Boeing freight jets past 2015 from an earlier target of 2013-14 as it seeks to cut costs and unify its fleet.

President Yang Jianhong said the unit of China's HNA Group would replace five Boeing 787-800 and two B737-300 cargo jets with Airbus A330 and A320 planes this year, aiming to raise efficiency by operating just one brand of aircraft.

The company's fleet size of 26 will remain unchanged, he added.

Partly the property of China's fourth largest carrier, Hainan Airlines, Hong Kong Airlines has had a tough few weeks, with Hong Kong's aviation regulator halting the expansion of its 20-strong passenger fleet following complaints about service standards.

That block raised fresh doubts about billions of dollars of orders lodged with Airbus by the airline, including an order for 10 A380s, also threatened by a row between China and the European Union over carbon emission charges.

Yang said his company, which competes with the city's dominant carrier Cathay Pacific Airways, had no decision yet on the fate of the A380 order.

"We have good relations with Airbus and communicate constantly," he said, but declined to comment further.

Hong Kong Airlines also operates six cargo planes via its subsidiary, Hong Kong Express, and has orders for six B777 freighters set to deliver in 2013 and 2014.

"We will initially push the delivery of Boeing freighters to after 2015 and will review the situation later," Yang said.

Hong Kong Airlines has been hurt by economic uncertainty in Europe which has weighed on passenger and cargo traffic and hurt some of the big industry players such as Cathay and regional rival Singapore Airlines.

It airline has announced the suspension of loss-making business-class only flights between London Gatwick and Hong Kong from September after about six months of operation.

"The European debt crisis has had a big impact on demand and there is limited chance for improvement in the short term," Yang said, adding the carrier would focus on building its regional network, especially on Chinese routes.

Yang said the company's first-half net profit fell about 50 percent from a year ago, partly hit by weak demand for its London route. He declined to disclose the profit amount.

Hong Kong Airlines had no financial problem and its parent would fully support the firm, HNA director Chen Wenli said.

The carrier, which delayed its planned $300 million initial public offering in Hong Kong last year, would not list its shares this year, but may consider an IPO in 2013, he said.

It was also considering a merger with Hainan Airlines, which is also controlled by HNA Group, Yang added.

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