October 30, 2007 / 8:54 PM / 11 years ago

INTERVIEW-Cathay Pacific to wait on next-generation planes

By Bill Rigby

NEW YORK, Oct 30 (Reuters) - Cathay Pacific Airways (0293.HK) will wait at least another two years before ordering any of the new wide-body planes offered by Boeing Co (BA.N) and Airbus, its chief executive said on Tuesday, despite the promise of cutting fuel costs and predictions of a surge in Asian air travel.

Hong Kong’s flagship airline, which is the third-biggest in Asia, is in no hurry to make a decision and is happy to avoid the hassles experienced by rival Asian carriers of being the first to fly such revolutionary aircraft.

“If you are one of the early customers, you can be almost certain that it’s going to go wrong,” Tony Tyler, Cathay’s chief executive, said in an interview with Reuters. Airbus’ A380 superjumbo, the largest commercial plane in the skies, entered service only last week after two years’ delay, while Boeing just announced a six-month delay in producing its lightweight 787 Dreamliner.

Given the inevitable teething problems, Cathay is shying away from billion-dollar commitments for new planes that won’t be delivered for five years or more.

“I don’t think we are comfortable ordering that far ahead on a new aircraft type,” said Tyler, who took over as Cathay CEO in July. “I don’t think we’ll be making a decision on any of these aircraft for at least two years.”

A380 NOT AN OPTION

Cathay has a mix of large Airbus and Boeing jets in its 110-strong wide-body fleet, and is taking delivery of another 23 Boeing 777 minijumbos over the next four years or so to cope with expected growth in traffic to Hong Kong and China.

Airbus’ A380, which made its maiden commercial flight for Singapore Airlines (SIAL.SI) last week, is not an option for Cathay right now.

“In our current fleet and network, it doesn’t make as much sense as getting more 777-300ERs,” said Tyler, referring to Boeing’s extended range minijumbo, which seats about 385 people, fewer than the 500 or more that the double-decker A380 can accommodate.

“All our financial modeling shows that we are better off offering more frequency with a very efficient aircraft like the 777 than simply adding more capacity to an existing frequency, which is what we would be doing if we introduced the A380,” he said.

Cathay is also wary of being an early customer on an unproven commercial plane. “We want to see that aircraft (the A380) in operation for a bit first,” said Tyler. “It’s no fun being an early customer.”

Singapore Airlines, which is Asia’s largest carrier, had to wait much longer than expected for its first A380 after wiring problems repeatedly pushed the schedule back.

In the last month, Boeing has been telling its first 787 customers — led by Japan’s All Nippon Airways (9202.T) — that they will have to wait at least six months more than planned as it wrestles with out-of-sequence work and a shortage of bolts.

Despite his caution over the A380, Tyler said that if Airbus stretched the plane to fit more passengers, or increased its take-off weight to extend its range, Cathay might buy.

“Either of those options would make it more economic and more competitive from our point of view,” said Tyler, who wants a bigger plane which can carry more cargo and is more suited to very long trans-Pacific routes.

Airbus, a unit of European aerospace group EADS EAD.PA, has mentioned a stretched version of the A380, but there are no plans to build it yet.

NO DECISION ON 787 VERSUS A350

Tyler said Cathay was also interested in Boeing’s 787 and Airbus’ rival A350 XWB — the new generation of mid-sized, long range, carbon-composite planes — but gave no estimate of when a decision would be reached.

“That promises to be quite an interesting bit of work, to look at both those aircraft,” he said. Cathay would be interested in the stretched 787-10 version of the Boeing plane, Tyler said, which Boeing has been considering but has not yet committed to build.

Cathay is keeping its eye on the market for new planes as air travel through its Hong Kong hub — from which it serves mainland China destinations — is set to grow dramatically over the next few years, spurred by the Beijing Olympics next summer.

Although Cathay’s capacity — a measure of the number of seat miles an airline offers — is set to grow only about 3 percent this year, new planes in its fleet will help produce a year-on-year increase of about 12 percent next year, said Tyler.

“All carriers from around the world are increasing their frequency into the mainland (of China),” said Tyler. “Even in the face of increased direct competition, I’m still very confident of our ability to carry our fair share — or more than our fair share — of traffic.”

((Reporting by Bill Rigby, editing by Tim Dobbyn; Reuters Messaging: bill.rigby.reuters.com@reuters.net; +1 646 223 6122)) Keywords: CATHAYPACIFIC CEO/

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