By Lisa Barrington SEOUL (Reuters) -AirAsia has signed a deal to buy 50 Airbus long-range A321XLR planes with conversion rights for another 20, as the budget airline nears the end of a restructuring
AirAsia Finalizes Agreement for Up to 70 Airbus A321XLR Aircraft
By Lisa Barrington
SEOUL (Reuters) -AirAsia on Friday signed a memorandum of understanding with Airbus to buy 50 long-range A321XLR planes with conversion rights for another 20 of the single-aisle jets, as the budget airline nears the end of a restructuring process.
Reuters reported last month that Tony Fernandes, CEO of AirAsia owner Capital A Group, was in talks to buy 50 to 70 of the latest Airbus narrow-body model, which would include the ability to convert some of the airline's large, existing Airbus order book into A321XLR orders.
Malaysia-based AirAsia is one of Asia's largest low-cost carriers and one of Airbus' largest customers, with around 360 planes on order.
Fernandes said the airline intends to order another 150 jets within a month, which would complete the carrier's fleet strategy for the time being.
Fernandes did not say which models would be ordered, but confirmed that AirAsia remains in previously reported talks for a potentially large order of smaller planes, either the Airbus A220 or Embraer E2 regional jet.
Capital A, hard hit by pandemic travel restrictions, was classified by Malaysia's stock exchange as financially distressed in 2022. Fernandes hopes to exit this so-called PN17 status soon, he said.
Capital A is in the process of selling its AirAsia aviation business to long-haul unit AirAsia X to consolidate long and short-haul operations under a single AirAsia brand.
After this disposal takes place, Capital A should exit PN17 status, Fernandes said.
The expanded and standalone AirAsia, which will remain listed in Malaysia, intends to issue its first bond in October and two credit agencies are looking to rate the company, he said.
LOW-COST NETWORK CARRIER
AirAsia, which has a current fleet of 255, has been restructuring its plane order book after it faced financial difficulties during COVID-19.
Like most budget airlines it mostly operates economy-only narrow-body planes. Fernandes said he was negotiating with Airbus about what to do with an historical order for 15 A330 wide-bodies but that he had not yet cancelled any.
Fernandes wants to expand AirAsia flights to North America and Europe, but still at budget prices. Airbus' long-range narrow-body models are key to that vision, he says.
But single-aisle planes can only fly so far, so AirAsia wants to establish hub airports in the Middle East, Europe and Asia-Pacific.
AirAsia is in talks with four cities in the Gulf, including in Saudi Arabia and the Emirate of Ras Al Khaimah, Fernandes told Dubai Eye radio this week. Bahrain is also a potential candidate, a company presentation showed on Friday.
(Reporting by Lisa Barrington; additional reporting by Makini Brice and Dominique Vidalon; Editing by Susan Fenton and Hugh Lawson)
