Impact Analysis of Spring Airlines' $4.128 Billion Aircraft Purchase Plan

Based on the collected data and information, I will conduct a comprehensive analysis of Spring Airlines’ $4.128 billion aircraft purchase transaction.

Spring Airlines announced on December 29, 2025, that it had signed an agreement with Airbus to purchase 30 A320neo series aircraft, with a total list price of approximately $4.128 billion (the actual transaction price will be lower than this list price)[1]. The aircraft will be delivered in batches from 2028 to 2032, with funds sourced from own capital, bank loans, and other financing methods[2].

As of the first half of 2025, Spring Airlines owns 133 Airbus A320 series aircraft, including:

• A321neo: 12 aircraft
• A320neo: 46 aircraft
• A320ceo: 75 aircraft[1]

In the first half of 2025, 4 A320neo aircraft were introduced, with no aircraft retired[1]. This addition of 30 aircraft will increase the fleet size by approximately 23% by 2032 (from 133 to 163 aircraft), with a compound annual growth rate of about 4.2%.

• Calculated at an average of 190 seats per aircraft, the 30 new aircraft will add approximately 5,700 seats of capacity
• Assuming 10 hours of daily utilization per aircraft and an average segment length of 2 hours, each aircraft will operate 5 flights per day
• The 30 aircraft will add 150 daily flight capacities
• Annualized, capacity will increase by approximately 23%, significantly outpacing the industry fleet growth rate (projected at 3.4% in 2025)[3]

The Chinese civil aviation market exhibits the following characteristics:

• Available Seat Kilometers (ASK) are projected to grow by 5.8% year-on-year in 2025, with international ASK increasing by 11.9%[4]
• The domestic market faces intense competition, with average economy class fares declining by 12.7% year-on-year in 2024 and a further 2.9% in 2025[4]
• The international market is recovering strongly, with international flight volumes reaching 103.6% of 2019 levels in 2025[4]

Spring Airlines’ capacity expansion strategy:

• In the first half of 2025, international ASK (Available Seat Kilometers) recovered to positive growth compared to 2019 for the first time[1]
• International capacity share led the industry for the first time, with market shares on multiple routes hitting new highs[1]
• Transfer passengers increased by 23% year-on-year, with international transfer passengers growing by 25%[1]

Advantages of A320neo over A320ceo:

• Fuel efficiency improved by approximately 20%, with seat-specific fuel consumption and carbon dioxide emissions reduced by 20%[5]
• Operating costs reduced by 8%[5]
• Maximum seating capacity up to 194[6]

The new fleet will be mainly used for:

1. Replacing old aircraft
   : Gradually replacing older aircraft among the 75 A320ceo models
2. Expanding international routes
   : Supporting expansion in international markets such as Japan, South Korea, and Southeast Asia
3. Increasing frequency on existing routes
   : Enhancing flight frequency at core hubs like Shanghai

(Q1-Q3 2025):

• Operating revenue: 16.773 billion yuan[1]
• Net profit attributable to shareholders: 2.336 billion yuan[1]
• Q3 single-quarter net profit: 3.5 billion yuan, up 34% year-on-year[1]
• Market capitalization: Approximately $5.523 billion (~39 billion yuan)[7]
• Total cash: $897 million (~6.3 billion yuan)[7]
• Asset-liability ratio: 88.51%[7]

:
The list price is $4.128 billion, and the actual transaction price is usually 60-70% of the list price, so the estimated actual payment is approximately $2.5-2.9 billion (~17.5-20 billion yuan). Delivered over 5 years from 2028 to 2032, the annual capital expenditure will be approximately $500-600 million (~3.5-4 billion yuan).

:

1. Own funds
   : Current cash of 6.3 billion yuan, plus operating cash flow (2.336 billion yuan net profit in Q1-Q3 2025), can cover part of the expenditure
2. Bank loans
   : Considering the asset-liability ratio already reaches 88.51%, new loans will further increase leverage
3. Operating leases
   : May adopt partial leasing to reduce one-time capital pressure

:

• Short-term pressure
  (before 2028): Limited financial pressure, with sufficient time to accumulate funds
• Mid-term impact
  (2028-2032): Annual capital expenditure of 3.5-4 billion yuan, equivalent to 8-10% of current market capitalization
• Leverage level
  : Asset-liability ratio may further rise from 88.51%, requiring attention to debt structure

:

• A320neo reduces fuel costs by 20%, which will significantly lower unit fuel costs
• Unit cost decreased by 3.5% year-on-year to 0.303 yuan in the first half of 2025[8]
• Introduction of new models will further strengthen cost advantages
• Assuming each aircraft saves 15 million yuan in fuel costs annually, 30 aircraft will save approximately 450 million yuan per year

: Data from the first half of 2025[8]:

• Unit cost: 0.303 yuan, down 3.5% year-on-year
• Unit non-fuel cost: 0.201 yuan, up 1.9% year-on-year
• Unit sales cost: 0.0043 yuan, far below industry average
• Direct e-commerce sales ratio: 99.7%[8]

: H1 2025 net profit margin:

• Spring Airlines: 11.34%[1]
• Three major airlines (Air China, China Eastern Airlines, China Southern Airlines): All negative or low single digits[9]

Spring Airlines’ “Three Highs and One Low” model:

• High load factor
  : Average load factor of 90.52% in H1 2025 (91.31% in the same period of 2024)[8]
• High daily aircraft utilization
  : Increasing flight frequency by extending operating hours (before 8 AM or after 9 PM)
• High asset turnover
  : Improving aircraft turnaround efficiency through precise customer positioning
• Low sales and management costs
  : 99.7% direct sales + digital marketing

:

1. Fuel cost advantage
   : A320neo improves fuel efficiency by 20%; assuming fuel costs account for 30% of total costs, each aircraft saves approximately 15-20 million yuan annually; 30 aircraft will save approximately 450-600 million yuan per year after full operation
2. Continuous reduction in unit cost
   : New models increase seating capacity to 194 (vs. A320ceo’s 180); further dilute unit fixed costs; projected unit cost can drop below 0.28 yuan
3. International market competitiveness
   : Chinese airlines’ capacity share on China-Europe routes has reached 77% (55% in 2019)[4]; can fly via Russian airspace for shorter routes and higher fuel efficiency[4]; new models will support international route expansion

: Long delivery period from 2028 to 2032, with risk of Airbus delivery delays; the industry generally faces supply chain issues, with Airbus delivering an average of 59 aircraft per month from January to October 2025, only 81% of 2019’s full-year level[3]; engine supply chain issues may spread to new aircraft deliveries[8]

: Current asset-liability ratio of 88.51% is already at a high level; new financing will further increase leverage; need to balance capacity expansion and financial stability

: Intense domestic market competition, with continued pressure on fares; domestic route passenger-kilometer revenue decreased by 4.8% in H1 2025[1]; international market is recovering but faces geopolitical risks

: Juneyao Airlines announced the purchase of 25 Airbus A320 series aircraft on the same day, with a transaction value of $4.1 billion[1]; more competitors in the low-cost airline market; three major airlines are also advancing fleet renewal

: This aircraft purchase plan reflects Spring Airlines’ confidence in the long-term development of the Chinese aviation market and aligns with the following strategic directions: 1. Optimizing fleet structure: Replacing old aircraft with new models to reduce operating costs; 2. Expanding international markets: Supporting the expansion of international route networks; 3. Consolidating low-cost advantages: Strengthening core competitiveness through technological upgrades

: Capacity expansion: Fleet size increases by 23%, with an annual growth rate of approximately 4.2%, higher than the industry average; financial structure: Short-term pressure is manageable, mid-term needs attention to leverage levels, but fuel cost savings can partially offset; competitive position: Further strengthens cost advantages and consolidates leading position in the low-cost airline market

: 1. Precisely grasp changes in market demand and reasonably plan capacity deployment rhythm; 2. Optimize financing structure and control financial risks; 3. Continuously promote cost control and leverage the technical advantages of new models; 4. Accelerate international route layout and improve profit quality

Spring Airlines’ aircraft purchase plan is a forward-looking layout against the backdrop of slow industry growth. By introducing more efficient new models, it will further consolidate its leading position in China’s low-cost airline market, but it needs to balance the pace of capacity expansion and financial stability.

[1] Sina Finance - “Two Chinese Airlines Announce on the Same Day: Total Purchase of 55 Airbus Aircraft” (https://finance.sina.com.cn/jjxw/2025-12-30/doc-inhenvwe9981382.shtml)
[2] Caizhongshe - “Spring Airlines to Purchase 30 Airbus A320neo Aircraft for $4.128 Billion” (https://m.caizhongshe.cn/news-7411385770269406553.html)
[3] Huatai 2026 Annual Outlook - “Transportation: Focus on Supply-Demand Improvement and Growth Stocks” (https://finance.sina.com.cn/stock/stockzmt/2025-12-03/doc-infznksp1989559.shtml)
[4] Yicai - “Chinese Civil Aviation Passenger Volume Hits Record High, How to Escape ‘High Volume but Low Revenue’” (https://m.yicai.com/news/102975020.html)
[5] Wikipedia - “Airbus A320neo Series” (https://zh.wikipedia.org/zh-hans/空中客车A320neo系列)
[6] Spring Airlines Announcement - “Purchase of 30 Airbus A320neo Series Aircraft” (https://finance.sina.com.cn/jjxw/2025-12-29/doc-inhenrqk4724676.shtml)
[7] Yahoo Finance - “Spring Airlines (601021.SS) Stock Price, News, Quotes and Records” (https://hk.finance.yahoo.com/quote/601021.SS/)
[8] Spring Airlines 2025 Half-Year Report - Sina Finance (https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=601021&id=11408046)
[9] Eastmoney.com - “Continuous Exchange Rate Fluctuations Benefit Import-Dependent Industries” (https://finance.eastmoney.com/a/202512273603575955.html)