AirAsia orders 100 more Airbus A320s in $ 9.4 b mega deal

AirAsia has confirmed an order for 100 more Airbus A320s. The 100 Airbus A320s ordered consist of 36 A320s with the Current Engine Option (CEO) and 64 A320s with the New Engine Option (NEO). The aircraft will be used to accelerate AirAsia’s growth in its core markets of Malaysia, Thailand and Indonesia, followed by the newer markets of Japan and the Philippines.

The order was announced during a visit by British Prime Minister David Cameron to the Airbus wing manufacturing facility at Broughton in the UK, where Cameron witnessed the signing of documents by Tan Sri Tony Fernandes, Group Chief Executive Officer, AirAsia and Fabrice Brégier, President and CEO, Airbus.

The deal is worth $ 9.4 billion at list prices but in practice, aircraft are sold at significant discounts. The contract reaffirms AirAsia’s position as the largest A320 Family customer in the world. Altogether, the carrier has now ordered 475 single aisle aircraft from Airbus, comprising 264 A320NEO and 211 A320CEO. Over 100 aircraft have already been delivered to the airline and this additional purchase will see AirAsia’s aircraft deliveries continue until year 2021.

Tan Sri Tony Fernandes, Group Chief Executive Officer of AirAsia said, “We have three gold mines in Malaysia, Thailand and Indonesia. On the other hand, Philippines and Japan have enormous potential growth. With these added aircraft, it goes in line with our strategy to further build our already extensive network through new routes and added frequencies and allow AirAsia to maintain its market leadership and dominance especially in Malaysia and Thailand.”

The additional number of delivery slots for the 36 newly purchased Airbus A320 CEOs will be up to 2016, with two to be delivered in 2013, four in 2014, 22 in 2015, and eight more in year 2016. The remaining 64 Airbus A320 NEOs will be delivered beginning 2017 with eight deliveries, 14 in 2018, 15 in 2019, 14 in 2020, and 13 more in 2021.

The deliveries for the existing 200 Airbus A320NEOs purchased last year will still be from 2016 up to 2026. As part of the purchase agreement, AirAsia will also have the option for another 100 aircraft consisting of 50 Airbus A320NEO and 50 A321NEO.

Fernandes added, “We have seen the likes of low-cost carrier giants such Ryanair and EasyJet dominating the European skies and the Southwest in the United States. Their first mover advantage, low cost mantra and discipline business model has allowed them to be a market leader in their own respective markets.

“For AirAsia, we are the only airline that possess those three attributes and we are excited to be in a market of over 3.2 billion people, hence are we confident all this added capacity will allow us to continue to dominate ASEAN and springboard our expansion into North Asia, China and India in short to medium term. In line with our growth plans, in 2013 through combination of firm Airbus deliveries and leases – Malaysia will take delivery of 10 aircraft, Thailand – eight aircraft, Indonesia – nine aircraft, Philippines – three aircraft and Japan – four aircraft.”