AirAsia inks US$18.5b deal for 200 A320neo aircraft

FRANCE: AirAsia Bhd has inked a US$18.5bil landmark deal for 200 A320neo aircraft, making AirAsia the biggest airline customer for Airbus for the single-aisle product line worldwide. The deal was announced at the Paris Air Show yesterday. AirAsia group chief executive officer Tan Sri Tony Fernandes toldStarBiz that the new aircraft would cater for markets in the Philippines, Indonesia, Thailand, Vietnam and other joint venture initiatives.

“We will still have a lot of growth for our Malaysian operations and there should be no shortage as to where to put the planes,” he said in a phone interview. The delivery of the 200 planes is expected to happen from 2016 to 2026. AirAsia has the capacity to take up to 500 aircraft.

High flyer: A computer-aided image of AirAsia's A320neo.

“With the trajectory of 500 aircrafts, it will make us one of the biggest airlines in the world,” he added. With the deal, the Malaysian low-cost airline is now the world's biggest airline customer for the A320 family with an order for 375 aircraft to date. So far, 89 A320s have been delivered. The order has eclipsed the US$16bil deal for 180 aircraft from India's Indigo that was sealed on Wednesday. This also confirmed a StarBizreport last Friday that speculated that AirAsia was poised to announce a landmark deal at the airshow.

On the funding, Fernandes said it would not be any different from the others that the company had funded previously. “We have strong cashflow. To fund this new order is a function of cash generation and debt financing. By the time these new ones come in, many of the A320s would have been paid. “We have been taking 16 to 18 aircraft a year and we were then a smaller company,” he said.

Did AirAsia get a discount for the big purchase as it is a long-term customer of Airbus? “We got a good price. And it is not just about the price but also about the service and products,” he answered. On his initial reaction on the news that AirAsia had placed the biggest order, Fernandes said he was both shocked and emotional. “But I am proud of how far AirAsia had achieved in less than 10 years of operations since it first started as a small Malaysian company.

“This is an important milestone in our growth, and this solidifies our position as the world's best low-cost airline. The new order is to cater to expansion plans in the Philippines, Vietnam and other parts of Asia. AirAsia has been hugely successful, increasing its annual passenger volume from 200,000 when we launched it as a low-cost airline in 2001 to an estimated 31 million this year,” he said in a statement yesterday.

Fernandes said with the introduction of the Airbus A320neo, AirAsia's guests could look forward to more exciting routes as it could now explore more destinations with the enhanced range presented by the new-gen aircraft. “We always believe in embracing technological advancements, and this new generation of Airbus A320neo aircraft will put us ahead of the competition and continue to be frontrunners in the volatile aviation industry,” he said. Fernandes said aircraft deal was in line with the company's rapid expansion plans and long-term vision to grow its associates throughout the region.

“We know that we have made the right choice in utilising these new aircraft, especially in times of rising fuel costs. “The Airbus A320neo aircraft will enable savings of approximately 15% in fuel consumption per annum per aircraft,” he said. Tom Enders, president and CEO of France-based Airbus, said in less than 10 years, AirAsia had established itself as one of the fastest-growing, innovative and most respected airlines in the business. “This landmark deal is the strongest endorsement yet of our decision to invest in the development of the A320neo and further consolidates the market leading position of the Airbus single-aisle product line,” he said.

AirAsia also confirmed the new aircraft would be powered by CFM International's technologically-advanced LEAP engine. Additionally, AirAsia's long-haul affiliate AirAsia X is also an all-Airbus customer having placed orders for 38 widebody aircraft. 

Earlier, at the air show on Tuesday, national carrier Malaysia Airlineshad also announced that it would buy 10 additional next-generation 737-800s, exercising its option to purchase the additional planes under an original deal sealed with Boeing in 2008. The order is valued at more than US$800mil. Incorporating new engines and large wing-tip devices called sharklets, the A320neo will deliver fuel savings of 15% and additional range capability of 500 nautical miles, or the ability to carry two tonnes more payload at a given range.

-thestar online.