AirAsia inks £11bn deal with Airbus
AirAsia thundered into the Paris Air Show with a record order for 200 revamped A320neo jets on Thursday — an $18.2bn (£11bn) deal that makes the Malaysian firm Airbus’s largest airline.
AirAsia chief executive Tony Fernandes, who is also trying to invest in West Ham, flew into France overnight to sign off on what one Paris brokerage termed an “amazing” 200-plane deal, which is also seen as a coup for engine maker CFM International.
“It is a culmination of a lot of hard work,” Fernandes told City A.M. “We operate in the market of almost 2bn people so there is plenty of opportunity for us.”
The deal wraps up a frenetic Paris Air Show which confirmed a strong rebound in Asian demand and sent industry records clattering like an airport departure board.
It also marks an attempt by Airbus to prove the case for its decision to update the best-selling A320 passenger plane, the backbone of low-cost airlines, and put pressure on rival Boeing which is undecided whether to match or trump that move.
“The neo is not only a better engine, but a better aircraft in lots of things,” Fernandes said at the signing ceremony for the deal.
The AirAsia order eclipsed a $16bn order for 180 aircraft from India’s Indigo, sealed on Wednesday, as the biggest ever civil aircraft order by the number of planes.
The deal adds to evidence of a multi-speed recovery that has seen Asian economies plan for frenetic transport growth, especially in the low-cost sector.
Underscoring how price-sensitive travel has shifted the balance of power in the industry, AirAsia and IndiGo are now Airbus’s first and second largest airline customers, lagging only the US leasing giants ILFC and GECAS .
A senior source familiar with the deal said that a clause would allow AirAsia to extend the deal by another 100 aircraft though this was not formally presented as an option, which would have cost the airline extra.
Fernandes confirmed at the press conference that he had not taken any options at this point.
AirAsia also plans to take another 86 aircraft already on order from Airbus to feed growth in its markets, quashing speculation of conversions to the new plane.
Shares in Airbus parent EADS bucked a weaker stock market yesterday to close up 0.78 per cent at €22.20.
Industry analysts say the rush of orders may put pressure on Boeing to make up its mind whether to re-engine its competing 737 airplane in 2016 or wait a few years longer and build an all-new model.