China Airlines (CAL) has reached an internal decision to order a fleet of Boeing 777s, but final board approval remains pending as it weighs the full scope of potential co-operation with newly announced strategic partner Singapore Airlines (SIA).

The Taiwanese carrier has in principle selected the 777-200 as its future regional and long-haul passenger aircraft. The final number of aircraft to be ordered has still to be settled and may be heavily influenced by CAL's tie-up with SIA. The airline had previously signalled its intention to acquire the widebody, when it signed a letter of intent for four 777-200s in mid-1995.

Its latest tentative plan calls for the purchase of six 777-200s and seven -200ERs, with options for a further six. CAL is known already to have enquired about the availability of some of Singapore's 777s. SIA is unable to absorb all of its 777 orders and options placed in 1995 and has deferred delivery of eight -200s planned for 1999 and 2000.

CAL, in addition, is discussing ordering two more 747-400s and four -400 freighters, with options on another nine. The need for an ultra long-haul aircraft is still under consideration, with the airline continuing to look at the Airbus Industrie A340-500, up to 10 of which have been ordered by SIA.

Board approval for ordering new aircraft is conditional on improvements to the airline's tarnished flight safety record. The memorandum signed with SIA includes managerial co-operation in the area of flight operations and maintenance. The Singapore carrier is understood to have dispatched Airbus A310 pilots to Taiwan to help. SIA offers "a low degree of cultural difference", notes CAL chairman Hung-i Chiang.

Lufthansa was hired in 1996 to overhaul CAL's pilot training in the wake of the latter's fatal Airbus A300-600R crash at Nagoya, Japan, in 1994. The Taiwanese carrier crashed a second A300 at Taipei Airport in February, however, killing 202 people.

Beyond pilot training and fleet commonality, the alliance has wider ramifications for the planned privatisation and international development of CAL. The agreement lays out the "general principles" for SIA to acquire an initial 5-10% stake in CAL. Under recently revised Taiwanese regulations on foreign shareholdings, it could acquire up to a maximum of 30%.

Taipei has been trying unsuccessfully to reduce the 71% stake in CAL held by the the Government-linked China Aviation Development Fund. "It would have been difficult to have got this below 50%, but with SIA, they have found a way of lowering it quickly and without going to the stock market," says ING Barings analyst Lee Meyer.

Airline co-operation in the area of marketing, route networks, cargo and ground services is also planned.

Source: Flight International