Korean Air, the country’s top flag carrier, will invest about $12 billion to buy 100 new passenger jets from Boeing and Airbus in its effort to strengthen short- and mid-range international routes. 

Under memoranda of understanding signed each with Boeing and Airbus overnight in France, Korean Air agreed to buy 50 B737 Max-8s and 50 A321 NEOs from the two plane manufacturers, according to Yonhap.

It will cost the airline some $12.23 billion, the largest purchase deal recorded in airline history in Korea.
 
Boeing's short- and mid-range B737 Max-8 and Airbus A321 NEO are regarded as next-generation passenger jets that consume 15-20 percent less fuel than other planes of the same class.

Airplanes that Korean Air is seeking to buy are models from the Airbus A320 family and Boeing’s 737, both of which are short-haul, single-aisle jets.


It will be the first time for Korean Air to order Airbus’ short-haul passenger jet model.

Korean Air has already run medium wide-body Airbus A330 and A380 superjumbo jets.

“The state-of-the-art passenger jets purchased are expected to replace part of Boeing’s outdated existing 737 models,” an industry insider said.

“In addition, they will be used to expand the carrier’s short- and mid-range international routes.”

The nation’s top flag carrier has put a focus on long-haul routes, while its budget carrier Jin Air has targeted short-distance trip goers. However, fast-growing competition from budget carriers has pushed Korean Air to expand its flight services for short-distance travelers.

Despite competitive business conditions, Korean Air achieved a surge in its operating profits in the first quarter of this year thanks to falling oil prices and an increase in inbound and outbound travelers.

The company said it posted 189.9 billion won in operating profit from January through March, up 787 percent from 21.4 billion won in the first quarter of 2014.

The upward move, however, is not expected to last in the second half of the year, affected by the recent outbreak of the Middle East respiratory syndrome in Korea.

“We feel the pinch from the spread of the disease from this week, witnessing a fall in Chinese visitors to Korea,” a company spokesperson said.



By Seo Jee-yeon and news reports

(jyseo@heraldcorp.com)