business

'AirAsia's US$23b Airbus deal not new'

KUALA LUMPUR: AirAsia Bhd’s “looming” blockbuster US$23 billion deal with Airbus SE at this week's Farnborough Airshow is not essentially a new acquisition, analysts said.

Instead, Asia’s largest budget airline was reconfirming the previous order with the possibility of getting better terms for the aircraft.

It was reported that Airbus was closing in on the US$23 billion deal, which was part of the European manufacturer’s potential US$29 billion deal with Asian carriers that are expanding their fleet because of surging travel demand in the region.

AirAsia had reportedly ordered as many as 100 A321neo narrow-bodies aircraft and additional 34 A330neo wide-bodies aircraft, with discounted prices.

CAPA Centre for Aviation chief analyst and Southeast Asia chief representative Brendan Sobie said AirAsia had initially ordered the A330neo but there had been some changes to the programme.

“These plane have already been pre-ordered for AirAsia. The airline is re-confirming the deal and probably trying to get better deal for the aircraft prices,” Sobie told NST Business.

“Although the pricing has been decided back then, the delivery date and aircraft specification have changed. That opens up the possibility of the renegotiation because the original deal might be lapsed. Therefore, it is a better deal now from the previous deal that had been negotiated four years ago,” he added.

Ever since the A330neo programme was first launched in 2014, Sobie said AirAsia had wanted to buy the aircraft from the initial 50 units before raising the number to 66 units. This was followed by the purchase of the A321neo.

“It has already been counted at the Farnborough 2014 for the A330neo and A321neo. The deal was already done a couple of years ago.

An Airbus spokesperson told NST Business that the company would not comment on on-going contract negotiations with customers.

Maybank Investment Bank Bhd aviation analyst Mohshin Aziz thinks the deal would be a long-dated forward of aircraft orders for the next five to 10 years.

“It is normal for AirAsia to take between 18 and 36 aircraft every year, depending on the airline’s forecast. The airline might get around 30 aircraft delivery per year, scattered across AirAsia’s entire operations like Malaysia, Thailand, Philippines, Indonesia, Japan and India,” he added.

Mohshin said AirAsia is a long-standing Airbus’ customer, noting that the airline was comfortable with the aircraft and technology as well as the support given such as the maintenance, repair, and overhaul (MRO) facility in Sepang.

“More than that, maybe genuinely Airbus gives better offer and that probably be the reason,” he said.

Mohshin said the aircraft purchase would be used for combination of new routes and adding the frequencies in existing AirAsia routes network.

He said AirAsia could either leverage on banks borrowings or finance lease to buy the aircraft, depending on the feasibility and time adjustment.

“In the past, the airline acquired aircraft and sold it to third-party financial company before leasing back for long period of time (finance lease).

“If the time is good for bank loans or operating financial leases, they will do that. Historically, AirAsia had only raised bond once to buy aircraft. But I don’t think they like it too much,” he said.

Mohshin said Airbus has increased its take-off rate and improve its plane performance to meet the need of AirAsia.

Most Popular
Related Article
Says Stories