AirAsia close to major new Airbus deal (5099)

NEW YORK: AirAsia
is putting finishing touches to a deal to buy up to 100 Airbus jets,
ending a flirtation with Canada's Bombardier and putting Asia's largest
budget carrier on course for regional expansion, sources familiar with
the matter said on Friday.
The deal for A320-family jets,
potentially worth about $9 billion, is designed to fuel the growth of
what is fast becoming a cluster of related airlines under Malaysian
entrepreneur Tony Fernandes, who placed a record order for 200 Airbuses last year.
Demand
from Asian low-cost carriers is helping to drive production at Europe's
Airbus and U.S. rival Boeing to record levels, shielding aerospace
workers from recession.
Talks are at the final stage but the
Airbus deal will not formally be ready in time to be announced at next
week's Berlin Airshow, the sources said, asking not to be identified.
AirAsia
last year picked a revamped fuel-saving model of A320 that will reach
the market from 2015. Its development and Boeing's response, an
upgraded 737, have dramatically increased competition in the $100
billion global jet market this year.
AirAsia says it still needs
more of the existing generation of A320 to support ambitious short-term
plans, which include expansion in the Philippines, Indonesia and Japan.
Negotiations
between Airbus and AirAsia for billions of dollars of new purchases,
initially for 50 firm aircraft orders and 50 options, were first
reported by Reuters in May.
The deal ends speculation over talks
between AirAsia and Canada's Bombardier, whose chairman intervened
personally earlier this year to try to persuade Fernandes to pick its
CSeries jet, a new challenger to Airbus and Boeing.
Bombardier's
bid to break the exclusive ties between Airbus and one of its largest
customers became public when a Reuters journalist spotted the
discussions at a Formula 1 racetrack on the eve of July's Farnborough
Airshow.
The sources said AirAsia would not opt for a densely packed 160-seat version of the plane being offered by Bombardier.
"AirAsia
is so close to Airbus that I think it would virtually give planes to
AirAsia to block anything Bombardier offered," said U.S. aerospace
analyst Scott Hamilton.
AirAsia's latest move could also sharpen
competition with Indonesia's Lion Air, another big-spending low-cost
carrier that has emerged as one of Boeing's biggest customers.
AirAsia,
with an operating fleet of 116 aircraft, has ordered a total of 375
Airbus jets as part of dramatic plans for expansion that now include
the acquisition of Indonesia's Batavia Air. It has said it will bring
forward deliveries as rising demand helps it offset high fuel costs.
"The
region that AirAsia serves has a population of 600 million people -
more than the U.S. or Europe - and the only way to get around a lot of
those areas is by air," Hamilton said.
Not all analysts are
convinced by AirAsia's expansion. Some local bankers say profits could
be hampered by pressure from potential losses at start-up units in
Philippines and Japan. Its shares have fallen 7 percent in the past 3
months.
AirAsia made a net operating profit of 130.94 million
ringgit ($42 million), excluding one-off items, in the second quarter,
down slightly from the same quarter last year.
Net profit was boosted by a one-off gain of 1.16 billion ringgit following a share sale at its Thai unit. - Reuters