S7 to Acquire 11 Boeings, Retire Soviet Fleet

S7, the country's second-largest airline, announced Tuesday that it would acquire 11 more Boeing airplanes and retire all of the Soviet models currently in its fleet this year to cut costs as fuel prices rise.

S7 is in talks with International Lease Finance Corporation, the largest lessor of planes to airlines, to add five used 767-300 models, four 737-800s and two 737-400s by January, company spokesman Kirill Alyavdin said by telephone.

Including existing deals with Boeing and Airbus, S7 will receive 70 foreign craft by 2014, the company said in a statement. S7 has already received four of six Airbus craft scheduled for delivery this year. It received three Boeing 737-800s last month.

"S7 is the first Russian airline to decide to withdraw all Soviet planes," Alyavdin said. "The Soviet planes use twice as much fuel as foreign planes. As fuel prices rise we can lower costs, boost margins and rein in increases in ticket prices."

S7 is scheduled to receive the first of 25 new Airbus A320s in 2009, the first of 10 Boeing 737-800s in 2010 and the first of 15 Boeing 787 Dreamliners in 2014.

Soaring jet-fuel prices have caused major headaches for the country's air industry, including alliance AiRUnion, which is being merged with state airlines into a new holding under Russian Technologies after falling in debt.