Airbus near blockbuster $31 billion jet sale to AirAsia

Airbus is is closing in on a blockbuster agreement to sell US$23 billion worth of aircraft to AirAsia Group and nearing an agreement to sell wide-body jetliners valued at about US$6 billion to Taiwanese startup StarLux Airlines.
Airbus is is closing in on a blockbuster agreement to sell US$23 billion worth of aircraft to AirAsia Group and nearing an agreement to sell wide-body jetliners valued at about US$6 billion to Taiwanese startup StarLux Airlines. PHOTO: REUTERS

LONDON (BLOOMBERG) - Airbus is said to close in on US$29 billion of deals with Asian carriers who are expanding their fleet because of surging travel demand in the region.

The European manufacturer is closing in on a blockbuster agreement to sell US$23 billion (S$31.4 billion) worth of aircraft to AirAsia Group, the continent's biggest budget carrier, according to people familiar with the matter.

Airbus is also nearing an agreement to sell wide-body jetliners valued at about US$6 billion to Taiwanese start-up StarLux Airlines, according to a source. The deals are based on list prices, and discounts are customary for bulk orders.

The orders are still subject to final negotiations, said the source, who asked not to be named discussing private talks. 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 source said.

The Malaysian airline, already the second-biggest customer for Airbus's re-engined A-320 narrow-body aircraft, is weighing an order for as many as 100 A321neo aircraft, according to sources. AirAsia is simultaneously close to agreeing to order an additional 34 A330neo wide-body jets, which would bring its total backlog for that aircraft to 100.

AIRASIA V INDIGO

The purchase of the A321neos would catapult AirAsia ahead of India's Interglobe Aviation as the biggest customer for Airbus' marquee narrow-body 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 wide-body programme amid heavy competition with Boeing's fast-selling 787 Dreamliner.

The new planes would help AirAsia chief Tony Fernandes further his plan to build a pan-Asian budget airline.

In India, he is planning more domestic flights, while international operations are on the cards for early next year. AirAsia Group also has a long-haul arm, AirAsia X, whose more than 20 destinations include Auckland, Tokyo, Sapporo, Chengdu, Shanghai, Melbourne and Honolulu.

On StarLux, the talks cover 12 A350-1000 aircraft and five of the smaller A350-900s, said the source, who asked not to be named discussing a confidential negotiation. A final deal has not been reached and a deal could still fall through, the source said.

FARNBOROUGH AIR SHOW

The A-350, Airbus's most successful new-generation wide-body aircraft, competes with Boeing's rival 787 Dreamliner and the US planemaker's coming 777X.

Flight Global reported in March that StarLux, founded by former Eva Airways chairman Chang Kuo-wei, was in talks with both companies for up to 14 aircraft it could use to begin long-haul service to North America by 2021.

Airbus, based in Toulouse, France, and AirAsia declined to comment. StarLux, based in Taipei, could not be reached.

Airbus and Boeing are poised to announce a slew of orders at the Farnborough air show, which starts on Monday (July 16). While Airbus' A330neo has proven less popular than the A-350, 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, which is expected to be disclosed at the show as Indonesian discount carrier Lion Mentari Airlines.