TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

AirAsia A330 order helps Airbus survive death match with Boeing

Benjamin Katz and Anuradha Raghu (Bloomberg)
Kuala Lumpur
Fri, July 20, 2018

Share This Article

Change Size

AirAsia A330 order helps Airbus survive death match with Boeing An AirAsia aircraft flies after taking off from I Gusti Ngurah Rai International Airport in Bali. (JP/Zul Trio Anggono)

A

irbus SE managed to stave off a devastating blow to its struggling A330neo widebody program from chief rival Boeing Co., securing a commitment for 34 more planes from the aircraft’s biggest customer, AirAsia Group Bhd.

While the $10 billion order from the Malaysian airline’s long-haul arm ranks among the larger deals announced at the Farnborough air show this week, its impact was even greater. Airbus’s U.S. rival lodged an intense campaign to dislodge AirAsia’s existing 66 orders -- none of them yet delivered -- and lure the Malaysian airline to its own hot-selling 787 Dreamliner.

"It was a close fight,” AirAsia Chief Executive Officer Tony Fernandes told reporters near Kuala Lumpur late Thursday. “Until a week ago, I wouldn’t have really known which way we were swinging.”

A loss would have been crushing for Airbus and for the neo, a re-engined version of its twin-aisle A330 with fuel-saving winglets and a new turbine from Rolls-Royce Holdings Plc. Before the show started, the plane’s order book stood at 224, and any backslide would have risked hurting the plane’s sales prospects.

“This is an extremely important moment for Airbus,” chief salesman Eric Schulz said separately at the expo southwest of London. “AirAsia X is the largest, fastest growing low-cost business in all of Asia. This is a very key customer.”

Negotiating Edge

As it stands, AirAsia now accounts for 38 percent of the A330’s backlog. Its primacy gave Fernandes a tremendous amount of leverage in negotiations, and from all evidence he took full advantage.

“We were thinking hard whether we keep the 66 A330neos,” Fernandes said. “That is what we were working on, to see which aircraft we want to buy: Do we buy Boeing? Do we buy Airbus?”

AirAsia X will use the biggest A330-900 variant, according to a statement Thursday, taking the group’s total order book for the plan to 100. AirAsia Group shares gained as much as 1.9 percent on Friday in Kuala Lumpur.

While an anticipated order for 100 A321neo narrow-body aircraft failed to materialize at the show, Fernandes said the airline needs capacity and will buy more planes. That order would have totaled $13 billion at list prices, before customary discounts. “I focused on this one first,” he said.

How Airbus’s failure to land the narrow-body order sealed a show win for Boeing

The new planes will help Fernandes further his plan to build a pan-Asian budget airline and capture market share from Persian Gulf carriers that have become major players in the region, as well as local operators such as Air India. The AirAsia X long-haul arm now operates about 20 routes.

Five or six of the new planes for AirAsia X will arrive in 2020 and be used in Thailand, Malaysia and Indonesia, Air Asia X Malaysia CEO Benyamin Ismail said at the briefing. Another 10 are scheduled for delivery in 2021 and will also be used in Thailand and Indonesia.

The A330neo, designed as a quick and easy upgrade to its A330 predecessor, previously suffered months of setbacks after being edged out by Boeing in key contests. Most recently, Airbus lost an order when India’s Vistara chose the 787. On Thursday, Boeing finalized a 787 sale to Hawaiian Airlines, which had canceled its A330neo contract in March.

In addition to the AirAsia X order, Airbus has sold eight more A330neos at the show, two to Uganda Airlines and six to an undisclosed buyer.

Fernandes said the negotiations on the Airbus order continued “until late last night.” He stayed home rather than make the trip to London in order to celebrate with a larger group of AirAsia staff, and because he had to meet with the chief regulator in the state of Sabah over low-cost terminal issues.

He said the decision to go with Airbus resulted from the biggest analytical undertaking that he’d done in 16 years since taking over AirAsia.

“We know every nut and bolt of this aircraft,” Fernandes said. “Pound for pound, we think we have a phenomenal aircraft.”

{

Your Opinion Counts

Your thoughts matter - share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.