AirAsia to place order for small jets, drop Airbus A330neo
FILE PHOTO: Tony Fernandes, the CEO of AirAsia's parent company, Capital A, attends an interview with Reuters in Sepang, Malaysia February 26, 2024. REUTERS/Hasnoor Hussain/File Photo
PARIS/HONGKONG, Feb 11 : AirAsia X plans a significant order for small jets as it adds new routes and flights for Asia's first-time travellers, while dropping its order for 15 larger Airbus A330neo planes, the co-founder of the Malaysian airline said on Wednesday.
Tony Fernandes, CEO of parent Capital A which recently restructured its aviation arm, said a choice between Airbus and Embraer regional models would be announced within the next month and would be larger than previously reported.
The order was expected to be announced late last month, but industry sources said it had been held up while the budget carrier completed talks over financing or outside investment.
"I think we're coming to the end of that journey and within the next month, we will announce the winner of the campaign," Fernandes told Reuters.
Industry sources have said AirAsia plans to order 100 of Airbus' smallest A220 jets, with options for 50 more. Sources said that the deal could now be enhanced to include 150 firm orders.
AirAsia is also in the process of firming up an order for 50 Airbus A321XLR long-distance narrow-body jets, Fernandes said.
The airline entrepreneur was speaking in an interview after announcing plans for a new low-fare Middle East hub in Bahrain.
Fernandes said AirAsia, which did not benefit from government lifelines during the industry's worst crisis, was ready to resume growth but "not at the expense of margins".
FUNDING OPTIONS TO BOOST FLEET
Asked how the airline would pay for hundreds of new aircraft shortly after exiting financial difficulties, Fernandes said it would tap a combination of sale-and-leaseback deals and bank debt but would increasingly own rather than lease its fleet.
Some fast-growing airlines have booked significant profits from sale-and-leaseback deals in which lessors buy planes and rent them back, yielding an injection of cash for the airline at the start of the lease term in exchange for higher rents.
"That's not my aim. There's a lot of equity value in there, but I'm not doing this to leverage and trade planes," Fernandes said when asked about the strategy of placing new orders.
AirAsia continues to reshape its order book.
In 2022, Airbus itself cancelled an order for 63 A330neo jets to ease financial pressure on one of its largest customers.
Fernandes' decision to drop a remaining order for 15 A330neos reflects a focus on narrow-body jets, though he did not rule out looking at newer Airbus A350 or Boeing 787 jets later.
After a turbulent period for airlines globally, Fernandes acknowledged leaving some bruises in the Dublin-based aircraft leasing industry, but dismissed any concerns over funding to secure what he confidently portrays as a new chapter of growth.
"When you see what we have achieved, it's nothing short of remarkable, if I say so myself. So I think in time, those who have been bruised - and we've been bruised as well - memories are short. Profitability changes many things."
Airbus declined to comment on aircraft negotiations.
