AirAsia X in aircraft lease deal worth US$500m

KUALA LUMPUR (Aug 9, 2012): Long-haul low-cost carrier (LCC) AirAsia X Sdn Bhd will lease six Airbus A330-300s from International Lease Finance Corp (ILFC) for 10 years for a combined US$500 million (RM1.55 billion) as it looks to double its fleet size and expand its network over the next two years, said its CEO Azran Osman-Rani.

Speaking to reporters after the signing of a letter of intent with ILFC here today, Azran said the six planes will increase its seating capacity by 66%. "(The new aircraft will enable AirAsia X to) add frequencies to our core routes such as Tokyo, Taipei, Sydney and Melbourne, which we want to increase to a double daily offering. Secondly, we want to extend our flights to new cities in countries that we are already flying to, such as China, South Korea, Japan and Australia," he said.

The six aircraft are powered by Rolls Royce Trent 700 engines and will be reconfigured to AirAsia X's existing A330 configuration of 12 premium flatbeds and 365 economy seats. The airline has an existing order for 20 A330s from Airbus. Next year, it will take delivery of four planes from ILFC and three from Airbus, and in 2014 it will receive the remaining two from ILFC and five more from Airbus.

Azran said upon delivery of the 14 new planes, it targets to carry seven million passengers. It carried 2.5 million passengers last year. AirAsia X currently operates a fleet of nine A330s and two A340s. Combined with the order of 20 A330s from Airbus, the six A330s from ILFC and plans to drop two A340s, it will have a fleet size of 35 aircraft by 2017.

"These six (leased) aircraft, together with our delivery orders from Airbus, will see AirAsia X being the dominant market leader in the low-cost long-haul segment," he said. Asked why the move to lease the planes, Azran said: "We want to make sure we are completely ahead of the game. The years 2013 and 2014 will be critical for the LCC space and we want to make sure that we will be the market leader well ahead of everyone else." He added that its load factor has grown over the years with 84% load factor in the first half of this year from 80% last year. He said the airline will still be able to maintain the load factor even with the additional capacity.

On jet fuel prices, Azran said it is not worried as the A330s are able to deliver a cost advantage to AirAsia X at the cost of 2.8 litres per seat per 100km consumption compared with the industry's cost of up to five litres per seat per 100km.

Meanwhile, AirAsia X co-founder and director Tan Sri Tony Fernandes said AirAsia X's listing is in progress and that it will be on Bursa Malaysia. "An announcement will be made in due course. It is certainly on the cards. (The timing) is for the board to decide. You can never say when because there are lots of factors to consider in terms of the markets.

"Internally, AirAsia X is ready to list. When we press the button will depend on external factors, but it (IPO) is imminent," he said. Fernandes also said that AirAsia does not intend to acquire any more airlines after Indonesia's Batavia Air, and will focus on organic growth.

-www.thesundaily.my