AirAsia to boost record Airbus order to 300 new planes

Manila Bulletin
By LIAU Y-SING and RAJU GOPALAKRISHNAN
July 6, 2011, 9:20pm

KUALA LUMPUR, July 6 (Reuters) – AirAsia Bhd will buy an extra 100 Airbus A320neo jets, taking its record-breaking order to 300 planes, a source said, a deal which would make the Malaysia-based budget airline one of the world's largest carriers.

The two sides announced an $18.2 billion deal 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 carriers such as India's IndiGo, Singapore's Tiger Airways and Australia's Jetstar .

''AirAsia had the first-mover advantage and it continues to stay ahead of the game by ordering fuel-efficient planes and keeping the size growing,'' said an aviation analyst with a Malaysian investment bank who declined to be identified due to company policy.

''But the key risk is if expansion plans do not succeed. The Malaysian base is fairly saturated so if the other markets do not grow or cannot take off because of protectionism or other factors, then they will find themselves having to manage a lot of aircraft,'' the analyst 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.

The schedule for deliveries of the latest batch of the A320neo planes will be at the discretion of AirAsia, the source added, without giving a timeline.

The initial order of 200 planes will be delivered from 2016, as Air-Asia seeks to reap the benefits of being based near the two fastest-growing aviation markets in the world -- India and China.

The A320neo is a version of Airbus's best-selling 150-seat passenger jet offering fuel savings with new engines from 2015.

Asian budget airlines placed a record $42 billion in plane orders during the Paris Airshow, signalling their high expectations for travel in the world's fastest growing market and also triggering worries some may not survive.