Asiana orders 25 Airbus planes for delivery starting in 2019

Asiana Airlines has decided to buy 25 aircraft from Airbus as part of the company’s efforts to increase midrange and short-haul flights in the future.

Korea’s second-largest air carrier announced Wednesday it will bring in 25 A321neo (new engine option) planes. These aircraft will be delivered from 2019-25, it added.

The A321neo, which will be released in 2016, accommodates 180 passengers and costs about $115 million.

“The A321neo has more seats than the old A321 by redesigning the cabin layout, and since it is equipped with a new engine that reduces fuel costs by 20 percent, it will help us to increase sales and reduce costs,” Asiana said in a statement.

The flag carrier operates 33 A321 and A320 aircraft, but starting in 2019 they will be replaced by the A321neo. The new aircraft will fly to Japan, China and Southeast Asia.

Kim Soo-cheon, the president of Asiana Airlines, said the decision to order the new planes completes the company’s blueprint for its fleet portfolio.

For its large jumbo jet, Asiana aims to bring in six A380 aircraft by next year. It is also planning to add 30 A350 jets from 2017-25. This year, it will receive two A380s and two A320s.

“We currently operate A321s, so operation and maintenance will be easier as we bring in the upgraded version of the same model,” said Kim. “When we select an aircraft, we evaluate whether it matches up with Asiana’s network, as well as price, specifications and operating costs. We believe the A321 is the most suitable model for operating midrange and short routes.”

Industry insiders say Asiana’s fleet plan reflects the company’s ambition to accelerate growth further after its voluntary debt restructuring program ended last year. Creditors of Asiana in December ended the company’s voluntary program that started in 2010. The air carrier had to apply for the program after Kumho Asiana Group’s liquidity crisis in late 2009.

“When we were in the debt restructuring program, it was difficult for us to announce big investment plans because we also had to get approval from creditors,” said an official from Asiana. “We are now looking forward to expanding our size and raising profitability.”

Asiana is hopeful after the company posted solid 2014 performance due to cheaper fuel. The carrier said on Wednesday that net profit in 2014 was in the black again, while both sales and operating profit increased from the previous year.

Asiana in 2013 had net losses of 114.7 billion won ($104 million), but last year, it had net profit of 62.7 billion won. Sales increased 2 percent year-on-year to 5.83 trillion won, while operating profit was 98.1 billion won a big turnaround from losing 11.2 billion won in 2013.

“Backed by the weak yen, the number of passengers to Japan increased, while there was a stable increase in Chinese and Southeast Asian routes,” the company said. “Cargo performance also was solid due to recovery in the U.S. economy.”

Analysts expect Asiana to continue to have better performance this year because of the decline in fuel costs and increase in tourists to Japan.

“Since there is a time difference for the company to actually receive the oil after a contract is reached, the impact of the oil price drop will appear noticeably from this first quarter,” Hana Daetoo Securities analyst Shin Min-seok said in a report. “Asiana’s fuel cost this year is expected to be 612.2 billion won lower than the previous year.”

Shin also forecast that the air carrier will benefit from more tourists to Japan. According to his data, Japan flights accounted for 12 percent of the company’s total sales in 2014, but sales have been rising since October.

“Asiana’s Japanese routes will have double-digit growth at least to the third quarter,” he said.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]