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Cablegate: Shenzhen Airlines to Buy 100 Boeing Aircraft

VZCZCXRO1487
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #1143 2900700
ZNR UUUUU ZZH
R 170700Z OCT 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6536
INFO RUEHOO/CHINA POSTS COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS GUANGZHOU 001143

SIPDIS

SENSITIVE
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STATE FOR EAP/CM SECOR AND YAMAMOTO
STATE FOR EEB/AN ROBL AND LIMAYE-DAVIS
STATE FOR EEB/CBA MERMOUD AND THOMPSON
STATE PASS DOT A/S ANDREW STEINBERG
STATE PASS DOT DAS SUSAN MCDERMOTT AND GLATZ

E.O. 12958: N/A
TAGS: EAIR ETRD CH
SUBJECT: Shenzhen Airlines to Buy 100 Boeing Aircraft


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1. (SBU) Summary: Shenzhen Airlines will soon announce a deal to buy
100 Boeing Aircraft -- the largest Boeing order for a Chinese
airline -- according to senior executives. The carrier claims it is
China's most profitable airline. It opened a pilot training school
this year, which will graduate its first students in 2008. End
summary.

Buying Boeings
--------------

2. (SBU) Shenzhen Airlines has just signed a contract to buy 100
Boeing aircraft, which is the largest Boeing order from China's
civil aviation industry, according to Shenzhen Airlines President Li
Kun. Li told Congenoffs on October 12, 2007, that the airline would
announce the deal at an appropriate time in the near future. He
explained that the airline was purchasing short and mid-range
aircraft, not aircraft suitable for intercontinental travel.
Currently, the company has over 40 Boeing planes and about 12 Airbus
aircrafts. In 2006, they took delivery of 12 planes -- a record for
the carrier. Li said the firm plans to increase its fleet to 100
aircraft by 2008 and 600 aircraft by 2015.

China's Most Profitable Airline
-------------------------------

3. (SBU) Shenzhen Airlines is China's most profitable carrier,
explained Liu Hang, the firm's Deputy Party Secretary. Citing data
from Citibank, Liu said the company's pre-tax earnings were 25.14
percent of total revenue -- the highest among China's airlines and
higher than many foreign carriers, including Lufthansa, British
Airways and Southwest. Shenzhen Airlines' total revenue was RMB 6.07
billion (about US$800 million) in 2006. Liu said its revenue goal
for 2007 is RMB 10 billion (US$1.3 billion), an increase of more
than 60 percent.

Pilot Training
--------------

4. (SBU) Liu also briefed Congenoffs on the firm's new pilot
training school. He explained that pilot shortage was a problem
facing the entire aviation industry in China, but Shenzhen Airlines
was of one of only a few airlines in China to open its own pilot
training school. According to Liu, the school enrolled it first
students this year and currently has 120 students who will graduate
in 2008. He said the school planned to admit 240 students next
year.

GOLDBERG

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