Airbus Nears $12.57 Billion Deal With AirAsia for A321s

Boeing, Airbus Look to Seal New Plane Orders
  • A deal may be announced as early as Tuesday in Farnborough
  • AirAsia Group already has fleet of 199 Airbus aircraft

Airbus Group SE is poised to win an order for as many as 100 jetliners from AirAsia Bhd., people familiar with the matter said, getting additional commitments from its biggest single-aisle aircraft customer.

The deal may be announced as early as tomorrow at the Farnborough Air Show, said the people, who asked not to be named because the discussions are private. The purchase would consist likely of A321neo narrow-body aircraft, which have a list price of $125.7 million apiece. Buyers typically negotiate discounts.

The Asian low-cost carrier will use at least some of the narrow-body planes to provide stepped-up service to India, one of the people said. AirAsia Group Chief Executive Officer Tony Fernandes, 52, has 304 single-aisle aircraft and 76 twin-aisle jets on order from the European planemaker as he builds a pan-Asian budget airline that seeks to ride the surge in air travel across the continent.

Sepang, Malaysia-based AirAsia and the planemaker declined to comment.

Asian budget carriers, following the growth of AirAsia across the continent, have purchased hundreds of jets from Airbus and its Chicago-based rival Boeing Co. In 2013, PT Lion Mentari Airlines ordered 234 planes from Airbus, the second time the carrier bought more than 200 aircraft.

Last year, Indian budget airline IndiGo confirmed a $27 billion commitment to buy 250 Airbus planes, underscoring growth plans for the decade-old budget carrier. IndiGo is the largest airline in India by market share. China Southern Airlines Corp. is the continent’s largest airline by number of fleet, with more than 600 planes.

Airbus shares rise
Airbus shares rise

Airbus rose as much as 1.55 euros, or 3.2 percent, to 50.58 euros in Paris. The stock has lost about 17 percent this year. AirAsia rose 1.9 percent in Kuala Lumpur trading. The shares have more than doubled this year.

If AirAsia’s potential purchase is announced in the next few days, it’s likely to rank as one of the biggest orders to come out of this week’s Farnborough International Airshow in the U.K.

Fernandes, whose budget airline group operated 199 Airbus planes as of the end of March, has used big airshows to place large aircraft orders. Two years ago, at the same event, Fernandes said he’d buy 50 A330-900neo airliners in one of the biggest deals of the show, when business reserve gave way to raw emotion as executives of both companies exchanged kisses and man-hugs.

25 Cents

Fernandes assumed 40 million ringgit of debt when he bought AirAsia for 1 ringgit (25 cents) in December 2001, according to the airline’s website. The carrier had two old aircraft when he took charge. Prior to running AirAsia, Fernandes was an employee at Richard Branson’s Virgin Group. The budget carrier now operates across India, China, Indonesia and is poised to start in Japan.

Budget airlines in the region are expanding amid a surge in air travel. Home to the world’s fastest-growing major aviation market, India posted 20 percent growth in air travel last year, according to the International Air Transport Association. In comparison, passenger traffic in China rose about 10 percent and less than 5 percent in the U.S., IATA said in a December presentation.

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