AirAsia To Double Airbus A320 Fleet To 200

January 5, 2007

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Malaysian budget carrier AirAsia announced on Friday plans to double its Airbus A320 fleet to 200 as it looks to expand its service in the region.

AirAsia, which introduced its low-fare, no-frills concept in December 2001, has firm orders for 100 Airbus A320 aircraft, with options on 30 more.

"We are looking at topping up the order," AirAsia Deputy Chief Executive Kamarudin Meranun told reporters.

Asked how many in total AirAsia plans to buy, he said: "Maximum 200."

The additional 70 aircraft would potentially give the 5-year-old airline one of the biggest fleets in Asia.

"In the next seven years, we want to be the largest airline in Asia," AirAsia Chief Executive Tony Fernandes said at the launch of a low-cost long-haul service to be operated by FlyAsianXpress (FAX) in which he has a 50 percent interest.

Kamarudin said AirAsia, which has a market value of about MYR3.8 billion ringgit (USD$1.1 billion), expected to finalize its fleet expansion plan by the end of this month.

Fernandes has said that the airline, which has access to some 500 million people in its Asia Pacific service region, including Indonesia, Thailand, Vietnam and Malaysia, needs more aircraft to properly fuel growth.

At a list price of around USD$65 million, an additional 70 A320s would cost AirAsia USD$4.55 billion. In December, Fernandes said that any plane purchases would be paid for using bank loans.

FAX will begin a long-haul budget service called AirAsia X in July, flying to destinations in China, India and Europe. Fernandes said AirAsia X would be looking to buy 20 aircraft, and was considering either Airbus A330-300s or Boeing 777-300s.

FAX Chief Executive Raja Mohd Azmi said AirAsia X is targeting 500,000 passengers in its first year of operation.

AirAsia X would add further pressure on state-owned local rival Malaysia Airlines to successfully execute its profit turnaround plan, analysts have said.

Fernandes declined to comment on media speculation that FAX is in talks to establish a global low-cost tie-up with British airlines easyJet and Virgin Atlantic, though FAX did say it would consider tying up with other low cost partners.

AirAsia has been offered to acquire a 20 percent interest, with another 10 percent optional stake, in FAX, Kamarudin said.

FAX is an unlisted rural air service that currently operates in the eastern Malaysian states of Sabah and Sarawak.

The other owners of FAX are Kamarudin and Raja Mohd Azmi, with 30 percent and 20 percent stakes respectively.

(Reuters)