HUGE AIRASIA ORDER IN WINGS AT AIRSHOW

June 22, 2011

Airbus and AirAsia are putting the finishing touches to a USD$17 billion deal for up to 200 aircraft at the Paris Air Show after flirting with dizzying figures as high as 300, including options, industry sources said.

The purchase, expected to be announced on Thursday, will be the climax of a week in which Airbus has been battling hard to secure momentum for its revamped A320neo plane.

The plane maker is gambling on demand from airlines anxious to cut fuel costs, as rival Boeing ponders whether to update its competing 737 aircraft or invest more money in leapfrogging Airbus with a new plane.

Industry sources said on the eve of the air show that Airbus and AirAsia were close to a deal for 200 aircraft.

The deal is one of the most keenly awaited orders of the air show and could eclipse a USD$16 billion deal for 180 A320neo's from India's IndiGo, expected to be closed on Wednesday.

Scenarios hammered out in weeks of negotiations between AirAsia and Airbus include 150 A320neo planes worth USD$12 billion plus options for 50 more, or 200 aircraft plus 100 options, aviation industry sources said.

However, a source familiar with the matter said the airline was likely to be cautious in topping up the deal with options.

An option is a commitment from the manufacturer to save a production slot for the customer but involves some cost to the airline, as the plane maker cannot sell the slot to others.

Options are not usually announced with air show orders.

Both companies declined to comment.

AirAsia chief executive Tony Fernandes has talked publicly of a bid to buy at least 150 aircraft as he sets out to more than double the airline in size to rival Southwest Airlines, but he told reporters last week the ball was "in Airbus' court".

The airline was named the world's best low-cost carrier in an award ceremony on the sidelines of the show on Wednesday.

(Reuters)

I think congratulation is an order for AirAsia. This company has no stopping and keep on growing. Simply amazing!!!

AIRASIA BECOMES BIGGEST AIRBUS AIRLINE

une 23, 2011
AirAsia thundered into the Paris Air Show with an expected order for 200 revamped A320neo jets plus 100 options on Thursday -- a USD$17 billion deal making the Malaysian firm Airbus's largest airline customer.

AirAsia chief executive and Formula One boss Tony Fernandes 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.

The deal is expected to wrap 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 AirAsia order is set to eclipse a USD$16 billion order for 180 aircraft from India's Indigo, sealed on Wednesday, as the biggest ever civil aircraft order by the number of planes.

In a key detail, 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.

SHIFT OF POWER

The largest ever order for A320-family aircraft is the third biggest in value for the European plane manufacturer behind major wide-body orders from Emirates and Qatar Airways.

Qatar was tipped to buy five Airbus A380 superjumbos this week but a deal has so far failed to appear. Flightglobal reported a rift between the airline and Airbus over its plans for a redesign of the larger A350-1000 wide-body aircraft.

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

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.

Another low-cost airline, India's GoAir, confirmed a previously announced order for 72 A320neo aircraft.

So far this week Airbus has reported firm or provisional orders for 545 A320neo aircraft. Including pre-show deals, there are signs it will reach close to 1,000 A320neo firm deals or provisional agreements by the end of the week.

It is a show of force from Airbus but also seen as a deliberate gamble directed at Boeing in a market for small airliners worth USD$2 trillion over 20 years.

Industry analysts say the rush of orders may put pressure on Boeing to make up its mind whether to re-engine its competing 737 plane in 2016 or wait a few years longer and build a new model from scratch to offer even greater benefits.

Boeing has said it will make the strategy decision affecting airlines and its suppliers by around the end of the year, and has vowed not to base its thinking on what Airbus does.

Analysts say the defection of a Boeing customer could however push the US plane maker into acting more swiftly.

American Airlines, the operator of an all-Boeing jet fleet, is in talks with Airbus about buying at least 100 narrow-body planes, Bloomberg reported. Boeing said this week it would not be surprised to see Airbus approaching its customers to try to flaunt the A320neo.

(Reuters)