Bloomberg News

AirAsia Considers Airbus Plane Orders as A320neo Awaited

May 25, 2012

AirAsia Bhd. (AIRA), Asia’s biggest discount carrier, is considering additional orders for Airbus SAS single- aisle jets after taking delivery of 100 A320s, with another 75 pending, Chief Executive Officer Tony Fernandes said.

An agreement would depend on the price Airbus could offer, Fernandes told journalists while visiting Toulouse in southern France yesterday to receive the airline’s 100th A320. Fernandes didn’t specify a number of planes. The two sides are negotiating an order for about 50 aircraft, said a person with direct knowledge of negotiations who declined to be identified because the talks are private.

AirAsia, which started with two planes a decade ago, placed an order last year for 200 of Airbus’s advanced A320neo model, which promises greater fuel efficiency than the current A320 thanks to new engines. The Toulouse-based planemaker, the world’s biggest manufacturer of commercial aircraft, won’t begin delivering the A320neo version until late in 2015.

“I have a sense that we have to advance our order because we don’t have enough,” Fernandes said. “The big question is whether we buy more aircraft, whether we lease more aircraft, or wait for the neo. I don’t think our 175 aircraft is enough till the neo comes.” Indonesia is one market where he’s looking to add more planes, he said.

AirAsia rose 4.1 percent to 3.60 ringgit at the close in Kuala Lumpur. Shares of European Aeronautic, Defence & Space Co. (EAD), Airbus’s owner, declined 1.6 percent to 27.55 euros as of 11:33 a.m. in Paris.

Production Increase

Airbus is raising production of the A320 to 42 planes a month by the end of 2012 from 36 a month in early 2011, and the company has studied an increase to 44.

Chief Commercial Officer John Leahy said yesterday that Airbus won’t seek that goal at this point. Some suppliers are struggling with funding and boosting production rates, and Leahy said it makes no sense to increase further the number of A320s being built as the company gets closer to delivering A320neos.

The planemaker currently produces single-aisle models at factories in Hamburg, Toulouse and Tianjin, China, where an assembly plant built in 2008 will reach production of four planes a month by the end of this year.

A320s assembled in Tianjin had been planned for use only by Chinese airlines. Fernandes said Sepang, Malaysia-based AirAsia, which flies to Tianjin, will be the first non-Chinese carrier to accept delivery from the plant, with a A320 scheduled to join its fleet in December.

Leahy said yesterday that Airbus expects to receive another order from China for at least 100 single-aisle planes by the end of the year.

To contact the reporter on this story: Andrea Rothman in Toulouse, France, at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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