AirAsia Tops IndiGo Record Order as Asia Dominates Air Show

AirAsia Tops IndiGo Record Order as Asia Dominates Air Show
A computer image of the A320neo jet is shown. Photographer: Airbus via AP

AirAsia Bhd. placed an order for 200 Airbus SAS A320neo planes, surpassing a record contract confirmed by Indian carrier IndiGo a day earlier, as Asian airlines dominated the Paris Air Show.

The AirAsia deal, worth $18 billion at list prices, followed IndiGo’s order for 180 A320 and A320neo planes. Go Airlines (India) Ltd., Cebu Pacific and PT Garuda Indonesia also agreed to orders or commitments for another 127 A320-family planes during the exhibition.

“All the growth is in the Asia-Pacific,” said Neil Hansford, Chairman of Strategic Aviation Solutions, a Sydney-based industry consultant. “You aren’t seeing all that many new orders in Europe, and you sure aren’t seeing many new orders in the United States.”

The Asian A320 deals helped Toulouse, France-based Airbus announce more than 16 times as many firm orders as Boeing Co. at the show and contributed to the A320neo becoming the fastest selling new airliner in history. Chicago-based Boeing Co. has yet to decide whether to upgrade its rival 737 aircraft or design a completely new jet.

AirAsia, the region’s biggest low-cost carrier, became Airbus’s largest airline customer in the single-aisle market with its Paris order. The Sepang, Malaysia-based carrier has ordered a total of 375 A320-series aircraft, including 89 already in service, according to Airbus.

AirAsia Dominance

The carrier rose 4.1 percent to 3.29 ringgit in Kuala Lumpur trading, helped by a drop in oil prices yesterday that pushed up airline shares across the region. The airline has risen 30 percent this year, the best performance among the 31 members of the Bloomberg World Airlines Index.

“AirAsia will retain its dominance in the low-cost carrier market in Asia,” said Firdaus Hisham, a Kuala Lumpur-based analyst with Macquarie Securities Ltd. “There could be one or two concerns about overcapacity, but at the same time, Asia is a fast-growing market.”

Asia-Pacific international travel may expand 7.6 percent a year through 2014, compared with growth rates of about 5 percent in North America and Europe, according to the International Air Transport Association.

India Growth

IndiGo firmed up a previously announced order for 150 A320neos and 30 of the existing version of the A320. GoAir, another Indian budget carrier, confirmed a deal for 72 A320neos it first revealed last week.

“There are millions on trains in India that will move to air travel,” said Hansford. “The Indian market could grow fivefold so long as the middle class keeps growing.”

AirAsia has its main base in Malaysia, ventures in Thailand and Indonesia, and a long-haul affiliate. The carrier flies to more than 20 countries, according to its website. Chief Executive Officer Tony Fernandes and partners bought the then-unprofitable airline about a decade ago.

AirAsia now has “the ability to meet the huge growth potential offered by the Asian market,” Fernandes said yesterday at an air show press conference.

Airbus, a unit of European Aeronautic, Defence & Space Co., plans to introduce the A320neo, which features new engines, from late 2015. The planemaker is promising efficiency gains of 15 percent versus existing narrow-body aircraft.

Leap-X Engines

AirAsia will power its A320neos with the Leap-X engine from CFM International, a venture of General Electric Co. and Safran SA. 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.

Airbus had a record air show, with 418 firm orders valued at $44 billion. The A320neo, with a list price of $91.2 million, attracted a total of 667 orders and commitments worth almost $61 billion, taking the model’s overall total to 1,029.

Boeing had orders and commitments for 142 planes worth more than $22 billion at the show. Its orders included a contract for 10 737s from Malaysian Airline System Bhd. Bombardier Inc., the third-biggest planemaker, also won a contract for as many as 30 of its new CSeries plane from Korean Air Lines Co. at the show.

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