Juneyao Air anticipates $600 million in aircraft capital expenditures from 2020 to 2022

Juneyao Air anticipates $600 million in aircraft capital expenditures from 2020 to 2022, outlining its plans around the expected delivery of 32 aircraft during that period in its latest annual report.

The mainline carrier is scheduled to receive nine aircraft per year in 2020 and 2021, comprising two Boeing 787s in each period, and eight aircraft in 2022. Low-cost subsidiary 9 Air will receive three aircraft each year in 2021 and 2022.

This will result in $200 million capital expenditure in 2020, $250 million in 2021, and $150 million in 2022.

In 2019, the carriers received eight aircraft and phased out two from their combined fleet. Juneyao ended the year with 70 Airbus A320 and A320neo family aircraft and six 787s, while 9 Air had 19 737 jets and one 737 Max 8.

Both carriers plan to remove five aircraft from their combined fleet in 2020.

The company’s operating revenue gained 16.6% to CNY16.7 billion ($2.4 billion) in 2019, and against an 18% increase in operating costs, operating profit was up by 8.8% to CNY2.3 billion. Net profit for the year declined by 19% to CNY994 million.

The group posted a 15.8% gain in RPK, but against 17.2% higher ASK, load factor was down one percentage point to 85.2%. ASK and RPK on domestic flights, which form a significant portion of the total network, were up in tandem, by about 11% while RPK on international flights gained 47.4% against a 54.5% increase in ASK.

Among other risk factors, Juneyao highlighted the cost pressures of the yuan depreciating against the US dollar in 2019, due to intensifying international trade frictions, arising from the impact on dollar-denominated interest rates and oil prices.