AirAsia expands Airbus orders

Air-Asia will buy an extra 100 Airbus A320neo jets, taking its record-breaking order to 300 planes, a source said, a deal that would make the Malaysia-based low-cost airline one of the world's largest carriers. AirAsia and Airbus announced a $18.2 billion deal (Dh66.8 billion) for 200 planes at the Paris Air Show last month, shattering aviation records for the largest ever airline order. The additional order takes the list price of the contract to a staggering $27 billion. The bumper order highlights Airbus' growing lead over Boeing and throws the spotlight on AirAsia's aggressive growth plans at a time when high oil prices and an uncertain global economy are clouding the outlook for travel demand. Analysts expect the extended order to drive AirAsia's expansion as it competes with short-haul carriers such as India's IndiGo, Singapore's Tiger Airways and Australia's Jetstar in the Asia-Pacific region, the fastest growing in the world. Article continues below "AirAsia's last replacement order was in 2007-2008. These new orders are long overdue so it's not an aggressive order," said Kunal Sinha, an aerospace and defence expert with the Frost & Sullivan consultancy. "AirAsia's new fleet is to be used mostly to link Southeast Asia to India and China. By 2015, Southeast Asia will have open skies so you have to have a growth plan." Boeing yesterday said it expected 33,500 new airplanes to be delivered by 2030, driven by growth in India and elsewhere in Asia. AirAsia plans to list its operations in Thailand and Indonesia this year as it expands in those markets and is in talks to open a hub in Singapore, its chief executive Tony Fernandes has said. Like the previous order, the additional 100 planes would also carry CFM International engines, the source with direct knowledge of the deal said, declining to be identified because the deal is not public yet. The source said AirAsia would receive a discount for the entire order, but did not give further details. AirAsia's regional head for corporate finance and treasury Aireen Omar said, "We ordered 200 and so far there are no changes." An Airbus spokesman said the manufacturer would not comment on commercial discussions with customers that were confidential. AirAsia sares were down 0.3 per cent, while those of Airbus parent EADS were flat. AirAsia shares have more than tripled over the past year as investors supported its rapid expansion. AirAsia, which flies to 63 destinations in more than 20 countries, has 90 planes currently, almost all single-aisle Airbus A320s. Besides the 300 Airbus A320neo deal, it has another 75 Airbus aircraft already in the pipeline. "Though we look aggressive, we have expanded very cautiously," Fernandes told Reuters this week. "But I have always said this airline is worth at least 500 aircraft." According to International Air Transport Association (IATA) data, United Continental had the largest passenger fleet of 737 planes at the end of 2010, followed by Delta Airlines with 722, American Airlines with 618 and Lufthansa with 427. Non-IATA member Southwest Airlines, the only low-cost carrier currently in the top five, has around 550 planes.