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20
Oct

AirAsia X may swap 66-jet Airbus A330neo order to A350 planes

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Bloomberg

AirAsia X Bhd., the long-haul arm of the region’s biggest budget carrier, is looking at swapping an order for 66 Airbus SE A330neo wide-body jets to larger A350s in a bid to boost capacity on its busiest routes.

A review of the Kuala Lumpur-based discounter’s fleet requirements is underway and could result in a plan to trade up to the bigger wide-body, Tony Fernandes, chief executive officer of AirAsia group, said in an interview Tuesday. He said the Boeing Co. 787 Dreamliner will also be considered.

AirAsia X will remain focused on routes within four to eight hours’ flying time and would deploy the A350s on those services just as it had aimed to do with the A330s, Fernandes said, adding that a switch wouldn’t indicate a revival of plans to serve Europe. For Airbus, an order would shrink the 212-plane A330neo backlog while bolstering an A350 program that has itself suffered recent setbacks.

“Over the last 10 years we’ve been tweaking the model,” the CEO said. “Now that we kind of know what we want to do, we’re looking at the fleet. We’re toying with the A350. If we went A350, we wouldn’t use the A330neo anymore, we’d go all A350.”

AirAsia X currently has 10 A350-900s on order alongside the larger A330neo commitment, while its existing fleet is comprised of 30 current-generation A330s. The Boeing 787 “looks interesting as well,” Fernandes said in London.

The move would mark an about face from previous plans. In 2015, the Malaysian operator began looking at flipping the 10 A350s due for delivery from 2021 to A330neos, with the unit’s chief Benyamin Ismail saying the smaller jet was cheaper and just as economical.

AirAsia X rose 1.3 percent to 0.385 ringgit as of 9 a.m. in Kuala Lumpur trading. Shares of AirAsia Bhd., the group’s short-haul carrier, were unchanged at 3.40 ringgit.

While an order rethink could be lucrative for Airbus, with the A350-900 having a sticker price of $311.2 million versus $290.6 million for the A330neo, the switch would come as a complication given the airline’s status as a launch customer for the plane.

Fernandes said the first jet is due in December 2018, though the date is “slipping” after already being put back amid development issues with Rolls-Royce Holdings Plc.’s Trent 7000 engine. The company will send representatives to the model’s first flight, scheduled for Oct. 18 in Toulouse, he said.

AirAsia X is also exploring the business case for adding Airbus A321neos to serve routes to India and China that might not support bigger planes, Fernandes said. The main AirAsia short-haul operation already has orders for more than 400 upgraded Airbus narrow-bodies, including 100 A321 variants.

Commencing heavily discounted flights to Europe is unattractive right now, given the amount of capacity already deployed, the CEO said. “When we come into a market we’ve got to make sure we can really bring fares down, we don’t think we can,” he said, adding that serving the US from Japan could be a more interesting market, with an Osaka-Honolulu route doing “very well.”

Fernandes said plans to sell Air-Asia’s  Asia Aviation Capital Ltd. aircraft-leasing arm should come to fruition before the end of this year, with the company focused on two or three bidders from around the world.

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