LONDON (July 16): Airbus SE kicked off its sales campaign at this year’s biggest air show by announcing US$9.2 billion of orders from Asian carriers that are augmenting their fleets to meet surging demand for air travel in the region.
Taiwanese startup StarLux Airlines said it is buying 12 A350-1000 aircraft and five of the smaller A350-900s in a deal valued at US$6 billion at list prices that exclude customary discounts. Sichuan Airlines Corp will purchase 10 of the widebody planes. The A350-900 carries a tag of US$317.4 million apiece, valuing the mainland carrier’s order at US$3.2 billion.
Besides the above two contracts, the Toulouse, France-based planemaker is also working on a blockbuster agreement to sell US$23 billion worth of aircraft to AirAsia Group Bhd, the continent’s biggest budget carrier, people familiar with the matter said, asking not to be identified discussing private talks.
Sichuan Airlines and StarLux are among carriers boosting jet orders from Asia as more people in the region take to the skies for leisure and business. Asia Pacific is likely to have 3.5 billion passengers by 2036, adding more than double the forecast for North America and Europe combined, according to estimates by the International Air Transport Association. Airbus has said reducing the backlog of more than 7,100 planes is among the biggest challenges as production fails to keep pace.
The AirAsia orders are still subject to final negotiations, said the people. While no deal has been reached, the sides are close enough that at least part of the sale could be announced during the Farnborough Air Show outside London, the industry’s largest trade expo this year, the people said. Representatives for Airbus and AirAsia declined to comment.
The Malaysian airline, already the second-biggest customer for Airbus’s re-engined A320 narrowbody, is weighing an order for as many as 100 A321neo aircraft, according to people familiar with the discussions. AirAsia is simultaneously close to agreeing to order an additional 34 A330neo widebodies, which would bring its total backlog for that aircraft to 100.
AirAsia shares jumped 3.6% in Kuala Lumpur, their biggest gain in two weeks.
AirAsia Versus IndiGo
The purchase of the A321neos would catapult AirAsia ahead of IndiGo, operated by India’s Interglobe Aviation Ltd, as the biggest customer for Airbus’s marquee narrowbody jet, extending the Malaysian carrier’s existing orders to 504 planes.
Even more crucial for Airbus, a decision to take more of the larger A330neos would reaffirm AirAsia’s commitment to that widebody program amid heavy competition with Boeing Co’s fast-selling 787 Dreamliner.
The new planes would help Fernandes further his plan to build a pan-Asian budget airline. In India, he’s planning more domestic flights, while international operations are on the cards early next year. AirAsia Group also has a long-haul arm, AirAsia X Bhd, whose more than 20 destinations include Auckland, Tokyo, Sapporo, Chengdu, Shanghai, Melbourne and Honolulu.
StarLux, founded by former Eva Airways chairman Chang Kuo-wei, has plans to start regional operations in early 2020, followed by long-haul services in 2022. Deliveries are expected between 2022 and 2024, it said earlier Monday.
Chengdu-based Sichuan Airlines also leased four A350s, Airbus said Monday. The carrier counts state-owned China Eastern Airlines Corp. and China Southern Airlines Co. as stakeholders and operates an all-Airbus fleet of more than 130 planes, according to its website. The airline aims to expand its fleet to 180 by 2020.
The A350, Airbus’s most-successful new-generation wide-body, competes with Boeing’s rival 787 Dreamliner and the US planemaker’s coming 777X.
Airbus and Boeing are poised to announce a slew of orders at the Farnborough air show, which started Monday. Vistara, an Indian affiliate of Singapore Airlines Ltd., signed a letter of intent Monday to buy 13 A320neo planes and said it will be renting 37 of the narrowbody jets from leasing companies.
While Airbus’s A330neo has proven less popular than the A350, sales activity is starting to pick up.
That plane has a current backlog of 224 aircraft including 10 booked last month from an unidentified customer expected to be disclosed at the show as Indonesian discount carrier Lion Mentari Airlines PT.