This article from NYTimes.com has been sent to you by psa188@juno.com. China Airlines Confirms Plane Purchases December 25, 2002 By KEITH BRADSHER HONG KONG, Dec. 24 - China Airlines, the government-controlled carrier of Taiwan, confirmed today that it had concluded large contracts to buy jets from both Airbus and Boeing, but said the financial weakness of other airlines had allowed it to secure deep discounts. China Airlines agreed to buy 10 long-range Boeing 747-400's and 12 medium-range Airbus A330-300's, with options to acquire 6 more of the Airbus A330's, the company said, confirming figures that it had released in October. At list price, the Boeings would be worth $2 billion and the smaller Airbus planes would be worth $1.7 billion, or $2.5 billion if the options are exercised. But Roger Han, a spokesman for China Airlines, said that his company would actually pay considerably less, having bargained aggressively at a time when many other airlines are in financial difficulty and deferring or canceling orders for new aircraft. "Our transaction price is much, much lower than the list price," Mr. Han said, declining to be more specific. "There were some big discounts because right now the market competition favors airlines." Part of the discount for China Airlines, Mr. Han said, lay in promises by Airbus and Boeing to help the airline dispose of many of its current Airbus and Boeing jets as they are replaced by the new planes. It is rare for the participants in aircraft deals to talk publicly about the terms. Indeed, Airbus and Boeing have policies against doing so and said nothing about the details of today's transaction. But the China Airlines deal comes after considerable wrangling, political as well as commercial, and China Airlines has had to fight suspicions in Taiwan in particular that it is overpaying for the Boeing jets to help preserve Taiwan's military alliance with the United States. China Airlines came close last summer to buying exclusively Airbus jets, after Boeing quoted prices that the airline regarded as uncompetitive. That provoked strenuous lobbying by the Bush administration and by members of Congress, especially from Washington state. Boeing still builds many of its commercial airliners in the state, but has been struggling for new orders to keep its factories full because of the combination of the global economic slowdown and the attacks of Sept. 11, which have depressed air travel in many markets and left some airlines with little need for more planes. American officials reminded Taiwan of the island's continued dependence on military protection from the United States against any possible attack by China, and Taiwan's reliance on purchasing weapons from the United States at a time when many other countries refuse to do business with it for fear of offending Beijing. The lobbying was controversial in Taiwan, where several years of economic stagnation have produced a focus on economic issues over traditional security concerns. Many Taiwanese now view closer economic relations with the mainland as the best way to regain prosperity on their island, and this has made them somewhat less enthusiastic about close ties to the United States. Boeing also noted in its sales effort that the 747-400 had a slightly longer range with a full cargo than its long-haul rival, the Airbus A340. Range and cargo capacity were important because one of China Airlines' biggest markets is in carrying the flood of computer chips and other products from Taiwan's high-tech industries to American cities that are 13 to 15 hours away by air. Boeing welcomed the sale of the 747-400's, saying today in a statement that it was the largest deal this year for the intercontinental model. Mr. Han said that three of the jets would be freighters and were scheduled for delivery next year. Six passenger versions of the huge airplane are to be delivered from 2004 to 2006, along with a fourth cargo jet. But today's deal appeared to offer no immediate benefit for Boeing investors, as the company said that it had earlier begun counting the 747-400's in its inventory of orders. The planes for China Airlines had previously been labeled as going to an unidentified customer, Boeing said. http://www.nytimes.com/2002/12/25/business/worldbusiness/25JETS.html?ex=1041835622&ei=1&en=9ecfb402823690ac HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company