May 24, 2012
AirAsia is studying a potential USD$4 billion deal to buy another 50 Airbus A320 passenger jets, its founder said on Thursday, extending the budget carrier's dramatic growth, months after it placed a record order for 200.
Asia's largest low-cost carrier is ready to order the current version of Airbus's A320, while waiting for a more fuel-efficient version of the 150-seat plane it ordered in record quantities last year.
"In my mind, that is an aircraft order that we would need, but we haven't made the right analysis yet," Tony Fernandes said in an interview.
"We have to look at whether we buy or lease. My sense is that we are short of aircraft, and our team is now evaluating."
Fernandes was speaking after taking delivery of the Malaysian budget carrier's 100th A320. In total it has ordered 375 Airbus aircraft.
Economic growth and rising disposable incomes are spurring rapid passenger growth among Asian low-cost carriers, helping to shield Western plane makers from the malaise gripping developed economies.
A decision by Airbus and later Boeing to update their best-selling models with new engines to curb high fuel bills has produced a wave of orders in the last 12 months.
AirAsia ordered 200 of the revamped A320neos worth USD$18 billion in mid-2011. A fierce regional rival, Indonesia's Lion Air, deliberately topped the deal by one jet with a 201-plane purchase from Boeing months later.
AirAsia may, however, need more of the current model to meet its expansion plans until the newer A320neo reaches the market from 2015 onwards. Its growth plans include Japan.
"We will obviously be talking to Airbus about more A320s," Fernandes said.
Despite their importance in many fleets, some airlines are hesitant about buying the existing models, fearing that the value of their investment will plunge when the new A320neo and Boeing 737 MAX enter service, depressing resale prices for the older version.
But some in the industry believe resale values may decline less sharply than widely expected as Airbus and Boeing, bruised by past production problems, switch over their production lines gradually. If airlines can get a good deal on the purchase price, the older models can still look attractive, a source close to the talks said.
Although spending most attention on the new models, Airbus and Boeing need to fill production slots of the older planes to ensure a smooth transition, and in some cases are tying in deals for previous models together with sales of new ones.
Airbus has set an internal target of selling 300 of the A320ceo models this year, while acknowledging that Boeing will probably win the overall order race for the first time in six years as it catches up on sales of the newly revamped models.