Airbus Wins Record $18 Billion AirAsia Deal for 200 Neo Jets

Airbus Wins Record $18 Billion Order From AirAsia
AirAsia becomes Airbuss No. 1 airline customer in the single-aisle market, with a total of 375 orders for A320-series aircraft. Photographer: Fabrice Dimier/ Bloomberg

Airbus SAS won 200 orders for its A320neo jetliner from Malaysian discount carrier AirAsia Bhd., the biggest deal in the European planemaker’s history by aircraft numbers with a value of $18 billion at list prices.

AirAsia becomes Airbus’s No. 1 airline customer in the single-aisle market, with a total of 375 orders for A320-series aircraft, including 89 already in service, the Toulouse, France-based manufacturer said today at the Paris Air Show.

Airbus, a unit of European Aeronautic, Defence & Space Co., plans to introduce the re-engined A320neo from late 2015, promising efficiency gains of 15 percent versus existing narrow-body planes. Chicago-based Boeing Co. has yet to decide whether to upgrade its rival 737 aircraft or design a completely new jet.

“This landmark deal is the strongest endorsement yet of our decision to invest in the development of the A320neo,” Airbus Chief Executive Officer Tom Enders said at a press conference at the Paris show, adding that the neo has become “by far” the fastest selling airliner in the history of aviation.

The AirAsia contract capped a record air show for Airbus, which won 418 firm orders valued at $44 billion. The A320neo, with a list price of $91.2 million, attracted 667 orders and commitments worth almost $61 billion, taking the total since the model’s December launch to 1,029.

CFM Victory

AirAsia chose the Leap-X engine from CFM International, a venture of General Electric Co. and Safran SA, to power the planes. Two engines go on each aircraft, giving the order a value of about $4.8 billion based on list prices.

The Leap-X competes with the geared turbofan from United Technologies Corp.’s Pratt & Whitney unit.

For AirAsia, the deal “has secured its future with the ability to meet the huge growth potential offered by the Asian market,” Tony Fernandes, the carrier’s CEO, said at the briefing.

With its main hub in Sepang, outside Kuala Lumpur, AirAsia flies to more than 20 countries and has affiliates in Thailand and Indonesia, according to its website, while the AirAsia X division offers long-haul services.

“I don’t think it’s aggressive,” Angeline Chin, an analyst at Kuala Lumpur-based TA Securities Holdings Bhd. said in a telephone interview ahead of the announcement. “If the company believes that it can grow further, why not?”

AirAsia stock closed unchanged at 3.16 ringgit in Kuala Lumpur before the order announcement. It has risen 25 percent this year, valuing the company at 8.77 billion ringgit ($2.89 billion) and outpacing the 2.9 percent gain in Malaysia’s benchmark FTSE Bursa Malaysia KLCI Index.

EADS rose as much as 2.4 percent to 22.38 euros and was trading little changed at 21.83 euros as of 3 p.m. in Paris.

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