By Ben Blanchard
TAOYUAN, Taiwan (Reuters) -Taiwan’s China Airlines is postponing the retirement of some of its older aircraft due to delays in getting Boeing 787-9 jets that may result in compensation payments from the planemaker, the carrier’s newly appointed chairman said.
Taiwan’s oldest airline, established in 1959, is in the midst of a fleet renewal, last year splitting an order for new long-haul aircraft worth almost $12 billion at list prices between Boeing and European rival Airbus.
China Airlines has also ordered 24 Boeing 787s for regional and some longer-distance routes, including 18 787-9s and six of the stretched 787-10 variant.
But Chairman George Kao said China Airlines’ fleet renewal plan to replace ageing Airbus A330s and Boeing 737-800s with 787-9s and A321neos was being hit by delays in getting new aircraft delivered, especially the 787-9s.
“We are at present being greatly impacted. Some aircraft that were scheduled to be phased out, or handed back at the end of their lease, as some are leased, will remain and have their leases extended,” he told Reuters in an interview at the airline’s headquarters in Taoyuan, home to Taiwan’s main international airport.
Boeing has not given China Airlines an exact timeframe for the 787-9 delays, though it has said deliveries will “basically” start from the end of 2025, added Kao, a pilot by training who started out as a flight attendant and became chairman in March.
“This is written into the contract,” he said, when asked whether China Airlines would seek compensation.
“For example, if it’s in the supply chain, the responsibility is Boeing’s, and Boeing has to provide some compensation. But if it’s not, then there is no compensation. It’s all recorded in the contract.”
Boeing did not respond to a request for comment.
Other airlines are facing similar issues.
International Air Transport Association (IATA) Director General Willie Walsh, whose group represents airlines globally, this month called predictions of aircraft delivery delays throughout this decade “off-the-chart unacceptable”.
Still, Kao was upbeat about expansion plans, pointing to the more fuel-efficient 777-9s and A350-1000s ordered last year that will enable more capacity to be added to routes like New York and London, and a new third terminal at Taoyuan airport, the first section of which is expected to open later this year.
He signalled further aircraft additions ahead for subsidiary Mandarin Airlines, which flies almost exclusively domestic routes with ATR-72 turboprops and is getting a revamp to focus on regional routes from southern and central Taiwan with new jet aircraft.
“I can talk about this with aircraft lessors,” he said, without disclosing the jet models it could add. “We have this plan, to let Mandarin Airlines grow up.”
China Airlines faces competition at home not only from long-established rival EVA Air but also rapidly growing Starlux Airlines, which last week placed an order for 10 more A350s.
Kao said while the Taiwan market itself was small, transit traffic, which all three airlines are focusing on, meant supporting three full-service airlines was not an issue.
Seoul’s Incheon airport is too big, meaning passengers can get lost, Tokyo’s landing fees are too expensive and Hong Kong has “political issues”, whereas Taoyuan airport’s new terminal will greatly improve the travel experience, he said.
“Our passengers are not all Taiwanese; many are transit. Because Taiwan’s location, connecting the Pacific to all of Asia, is really very convenient.”
(Reporting by Ben Blanchard; Editing by Jamie Freed)
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