If you’re in the market for some pre-enjoyed Dreamliners, this auction is for you, as reported by FlightGlobal…
In this post:
China Southern wants to dump fleet of 10 Boeing 787-8s
China’s largest airline, China Southern, has a massive fleet of nearly 700 jets. For quite some time, the airline has been trying to sell its subfleet of Boeing 787-8s. The airline has 10 of these, and they’re an average of 12 years old, having been delivered in 2013 and 2014. The planes are configured with 266 seats, including 18 business class seats and 248 economy class seats.
China Southern hasn’t been very happy with these planes. The airline states that it wants to instead focus on larger wide body aircraft, which are higher capacity. Also keep in mind that while the 787-8 has great range, China Southern’s fleet doesn’t have the updated maximum takeoff weight, so these 787-8s aren’t as capable as some newer ones.
Last year, the airline started a project to try and sell these aircraft, though it was suspended earlier this year, given the uncertainty related to tariffs. The airline has now resumed this process. The idea is that China Southern wants to take an “all or nothing” approach, and it’s only willing to sell these Dreamliners if it can get rid of all of them, along with a spare pair of GE Aerospace GEnx-1B engines.
The airline claims it’s selling these planes to “further optimise its fleet structure,” and it’s inviting interest from both domestic and international companies. The sale will ultimately come in the form of an auction, which will take place over the course of one hour through the Hong Kong Stock Exchange online bidding platform.
Each plane is listed at 359-382 CNY million (50-53 million USD), so the starting price for the auction will be 3.96 billion CNY (550 million USD). There will be no physical aircraft inspection opportunity, and planes will be delivered in Guangzhou (CAN), or another location that both parties can agree on.
For those curious, China Southern’s 787-8s have primarily been operating out of Ürümqi (URC), in western China. Even though China Southern is a massive airline, its fleet overwhelmingly consists of narrow body planes. Aside from the 787-8s, the carrier’s wide body fleet consists of 22 Airbus A330-300s, 19 Airbus A350-900s, 15 Boeing 777-300ERs, and 20 Boeing 787-9s.
Will any airline pick up these used Boeing 787-8s?
It’s funny, because aircraft manufacturers have largely struggled to deliver aircraft on schedule, and so many airlines have complained about not having enough planes. Yet all too often when planes actually go on sale secondhand, there are just crickets.
On the plus side, here you have a sizable fleet of 10 aircraft, so it’s not like just one or two planes is being sold. There’s value to that scale. However, there are also some challenges here:
- Airlines tend to want the latest and greatest planes, and many airlines are hesitant to acquire planes without the updated maximum takeoff weight
- There’s such a wait nowadays for new cabin products, so if any airline acquires these planes, it might just have to be happy flying them with the current interiors for quite some time
I’ve gotta say, the way this entire deal is being structured confuses me a bit. “Hey, anyone want to spend half a billion dollars on planes at an auction? You can have a look at them after you have the winning bid.”
My default assumption is that no deal will actually happen here, though who knows. While global demand for new planes has slowed down a bit, you’d still think that some airlines might be interested.
For example, Qatar Airways can’t grow fast enough, and is perpetually short of aircraft, and has a sizable fleet of 787-8s that are around the same age. Adding 10 more frames to that fleet seems like it could only help, especially since Qatar Airways is fine with having a bit of hard product inconsistency.
As a total wild card, we know that Southwest is looking to expand and become like other airlines. A really fast way to add long haul, international service, would be to acquire these Dreamliners, since they could be flying in no time. Now, I think it’s highly unlikely that this happens, but I just think it’s fun to throw out there. After all, if Southwest otherwise ordered new wide body jets, it would likely be years until the first planes are delivered.
Beyond that, there are of course a countless number of other airlines that could benefit from a larger Dreamliner fleet. However, the way this is being structured makes me think that opportunities might be quite limited.
Bottom line
China Southern is looking to sell its fleet of 10 Boeing 787-8s. The airline is approaching this in an unconventional way, by trying to auction off these planes, all at once. I’m curious to see if any carrier bites. There’s typically limited interest when we see these secondhand wide body deals, though who knows. At least there’s some scale to this potential opportunity.
What do you make of China Southern’s attempt to sell its 787-8s, and do you think there will be any takers?
The LCC of Qantas Group (Jetstar JQ) could possibly have an interest in these frames. Jetstar has 11 B787-8 frames which are used primarily to short / medium haul international such as New Zealand, much of Asia.
It is no surprise that JQ is short of wide-body frames, having started an aggressive expansion plan, both domestically and internationally.
Further, up until recently QF had worked extensively with China Southern as a code-share partner for...
The LCC of Qantas Group (Jetstar JQ) could possibly have an interest in these frames. Jetstar has 11 B787-8 frames which are used primarily to short / medium haul international such as New Zealand, much of Asia.
It is no surprise that JQ is short of wide-body frames, having started an aggressive expansion plan, both domestically and internationally.
Further, up until recently QF had worked extensively with China Southern as a code-share partner for services from Australia to mainland China. So, QF at least, had a handle on servicing China Southern's aircraft in SYD, MEL, BNE, ADL & PER. However, the particular auction terms may present an awkward block for a company like QF Group which has been consistently conservative to its approach with second-hand wide-body frames. Memories go back to QF's acquisition of 2 x MH B747s - each of which became known as 'hangar queens' during their time in the QF fleet. The BA B747 had a different cabin configuration to QF's and took an eternity for a re-fit to emerge.
Having just announced a $2.4 billion profit for FY 2024-25, QF is cash positive - but CAPEX is tightly managed .. and particularly now, when so many new frames are coming in the immediate future. Think 12 A350-1000ULR, 12 A350-1000LR, B787-10's, B767-9's for international ... and a plethora of domestic frames including A321XLR's, A321LR's, A220-300's etc .
This will certainly be an interesting auction - and presumably good value for some company looking for 10 B787-8 frames and 2 additional engines. The auction market will be relatively limited - but the terms may be too onerous for many airlines. I could also see AA having a solid interest for these frames as well.
However, QF also has a 'refit' plan in place for their own 11 frames, so reconfiguration plans may not be such a hurdle.
A leasing agency (or consortium of leasing agents) could:
- supply a low ball bid just to keep these units off the market. Thus, artificially maintaining high leasing rates for wide bodies
- sub lease parts of the batch at one or two units each to airlines that need immediate capacity and familiar with the airframe & GE engines)
- disassemble several for parts due to the current shortage of replacement parts...
A leasing agency (or consortium of leasing agents) could:
- supply a low ball bid just to keep these units off the market. Thus, artificially maintaining high leasing rates for wide bodies
- sub lease parts of the batch at one or two units each to airlines that need immediate capacity and familiar with the airframe & GE engines)
- disassemble several for parts due to the current shortage of replacement parts (already done with A320NEO & A220)
- sell to Russia or Iran (however, would invoke distain from EU & rest of western world)
- invoke a provision of inspection as part of first refusal should the bidding fall flat
The Boeing supply chain is catching up. The above offer only has an immediate attraction before it becomes stale. If I was the seller, I'd offer an window of inspection to keep the offer valid and current.
Can someone explain how older 787-9s have a different maximum take off weight than older ones ? What was changed between older ones and newer ones ? Is it just certifications or have been updated
The first batch of B787-8 and B787-9 had 212t-218t / 247t-252.7t MTOW
Boeing gradually grew that to 227.9t /254.7t
The first batch of A350 came with 275t/308t
Airbus managed to grow it to 283t/322t
@Cas
The first batch of B787-8 and B787-9 had 212t-218t / 247t-252.7t MTOW
Boeing gradually grew that to 227.9t /254.7t
The first batch of A350 came with 275t/308t
Airbus managed to grow it to 283t/322t
10 or nothing, not many airlines can do this at such notice, likely GECAS/BOEING/AIRBUS will buy back and then sub sell the fleet?
Doesn’t AA need long haul planes, have 787-8s already and also own part of CS. I guess the takeoff weight would be the issue
Bet this gets bought by one of the lessors, this seems lime their type of deal.
I wonder if they can find their way into Iran. I'm sure the Iranians could use whatever they can get their hands on.
I don't see any conventional mainline carrier wanting anything to do with these. Far more suitable to let carriers like HiFly or similar go after them to use for ad hoc service they provide for various airlines seasonally, for Haj flights, and other services. I personally find HiFly to be one of the most interesting commercial aircraft operators out there. They are doing a great job in filling the gaps and found their niche. I...
I don't see any conventional mainline carrier wanting anything to do with these. Far more suitable to let carriers like HiFly or similar go after them to use for ad hoc service they provide for various airlines seasonally, for Haj flights, and other services. I personally find HiFly to be one of the most interesting commercial aircraft operators out there. They are doing a great job in filling the gaps and found their niche. I can actually see this kind of carrier emerge in the U.S. that fills gaps for mainline carriers seasonally on special routes for which they don't have the aircraft. Further, they are great with the utilization of planes that have varying products.
Adding to that and the OP's idea of QR...why? They have shown willingness to wet lease with carriers like Oman Air and IndiGo. They are not out of options as they wait for aircraft and HiFly and others could fill that gap if needed.
Global Airlines - your call!
Wonder if it would be practical to purchase these just for parts/cannibiaization ? Doesn't NH have a lotta these ?
Alaska has a few 787 from merger with Hawaiian - and is expanding quickly into international. Might be a fit?
nope. They already have plenty on order with HA.
Isn't AA or UA the largest operator of 787-8s? They're less desirable but if the price is right (and I don't know if this listed price is right or not) it might be worth it to an existing operator as the two major plane manufacturers are struggling to meet high demand.
If only it wasn't for the reserve price, my money would be on Global Airlines :-)
That's en extraordinary rule - no inspection allowed prior to purchase!? I cannot imagine any serious buyer would even think about this. As someone else has commented, this must be designed to deter any deal being done, presumably they have some other deal in mind already.
What an opportunity for Southwest.
This would be a perfect opp for AA. Already a partner with CS and adding 10 additional -8 would finally get them up to speed for widebody service and opportunities to expand Asian service out of PHX and LAX without breaking the bank.
AS if they want more widebodies faster? Or even AA if they have kept the seats removed from 788s and 772s earlier?
i bet ZipAir could use these...
QR owns a 5% stake in China Southern. I would have thought if they wanted these frames they would have done a deal outside an auction. My bet is AI...the cabins match their 787-8 dream liners and they need capacity to grow.
I think it'll be IndiGo. AI is already working on refurbishing their 787-8s so it makes no sense to buy new 787-8s only to retrofit them within the next year. IndiGo, on the other hand, doesn't have any sort of consistency with its wide-body product, so they can acquire these and use them on their DEL/BOM-IST flights and/or their MAN flights, potentially moving their 787-9 flights to a higher capacity location like CDG or LHR.
QR doesn’t own 5%. AA owns 1.5%. I doubt China would allow any foreign entity to own 5% of an airline.
QR owns 10% of Cathay.
@Nate. Google is your friend, pal. At the time of purchase….
Qatar’s stake in Cathay - 9.99%
Qatar’s stake in China Southern - 5%
AA’s stake in China Southern - 2.68%
Errr.. who would buy anything mechanical without inspecting them first? And for 500 millions?..
My take is that this deal in engineered to have no takers, which will in turn allow the airline to sell them to the real buyer they already have in the wings (probably a client state in central Asia)... at a huge discount.
"There will be no physical aircraft inspection opportunity..."
Yeah, who on earth is going to pay $550+ million USD for aircraft they can't inspect beforehand? Maybe they want to donate them to President Trump to curry favor? LOL
I wouldn't be too surprised if they get offloaded to somewhere like Russia or Iran
This. @Celbrian ftw.
Picking up 10 Dreamliners (-8) may be a great deal if the current operator has a need for 10 additional airframes but reconfiguring them would not be a quick fix with supply chain issues plaguing all Carriers. AA could use more widebodies and is a partner and holds a financial stake in CS but not sure they would want more of the -8. Southwest even being mentioned is laughable because they only fly 737s, have...
Picking up 10 Dreamliners (-8) may be a great deal if the current operator has a need for 10 additional airframes but reconfiguring them would not be a quick fix with supply chain issues plaguing all Carriers. AA could use more widebodies and is a partner and holds a financial stake in CS but not sure they would want more of the -8. Southwest even being mentioned is laughable because they only fly 737s, have no history of operating a Widebody and have No training Program, Support of flight simulators to even undertake such a venture. Introducing a New Fleet type usually requires 1-1.5 years to get everything up and running with Programs, Training etc and therefore more than likely it will go to a Carrier that already has the fleet and wants to add more frames. Deep financial pockets would also help.
Thanks for sharing the common knowledge re: Southwest’s history of aircraft.
Cabins are gonna stink from the stale cigarette smoke odor - if you've ever been in a smoker's car or a hotel room ever used by smokers, you know that disgusting odor, and you just can not get rid of it. It'll be the same with these planes. Hard pass.
If these frames do sell, please track them and keep us posted on them. If I boarded one of these after paying big for Qatar, I'd get right off.
Curious comment / post, to say the least.
Under Chinese law, smoking is unequivocally NOT permitted on any commercial airline service. Been that way for many, many years.
In fact, having flown numerous Chinese carriers over the years, I'd suggest that China Southern's fleet is a substantial cut above most other Chinese carriers in terms of in-cabin upkeep and maintenance.
By powers of deduction (from your above post) I can only assume that you...
Curious comment / post, to say the least.
Under Chinese law, smoking is unequivocally NOT permitted on any commercial airline service. Been that way for many, many years.
In fact, having flown numerous Chinese carriers over the years, I'd suggest that China Southern's fleet is a substantial cut above most other Chinese carriers in terms of in-cabin upkeep and maintenance.
By powers of deduction (from your above post) I can only assume that you are casting aspersions on passengers - who may have smoked before entering the airport terminal and boarding their flight ?? In other words, you are referring to a personal hygiene issue.
I would suggest that - if this is what you *meant* to say - that the majority of USA, European, Asian, African and Pacific Islands airlines would suffer from the same issue - which would invalidate your comment entirely. No carrier is immune from your alleged comment whether it be AA, UA, DL, SW. JB, BA, LH, AF, KL, KE, CX etc.
In short, it is your comment that is 'odious' - not China Southern's B787-8s.
Not saying which is right, but according to Wikipedia, China Southern has 34 737-8 MAX in their fleet and 15 777-300ERs. After reading this story, I was a bit surprised they had such a large fleet of 777s, so I went to Wikipedia to see the details of their fleet
@ David -- My mistake, I was including the freighters. Fixed, and thanks for pointing that out.
Absolutely not! …. If it’s a Boeing I ain’t buying!
the second a mistake fare pops up on a 777 qsuite you’re probably the first queen swiping her nearly maxed out credit card to by 5 tix.
We know that. The only plane you can buy is a toy.
Wrong VS!
I actually own a fully flight worthy and fully certified AOP.6. She is probably in better shape for her years than you are likely to be old bean …. :-)