AirAsia to buy 40 Airbus jets in blow to Boeing: source
KUALA LUMPUR : Malaysian budget carrier AirAsia has opted to buy 40 A320 jets from Europe's Airbus and will phase out its current Boeing fleet, an industry official said Wednesday, a decision seen as a major setback for the US aerospace giant in the burgeoning Asian low-cost airline market.
"Yes, AirAsia has picked Airbus. It will buy 40 jets. The contract will be inked on Friday," the industry source familiar with the deal told AFP.
AirAsia officials declined to comment.
Asked why rival Boeing lost the deal, the industry insider said: "In terms of price and technical specifications, Airbus is better."
"All the current Boeing aircraft with AirAsia will either be phased out or sold," the source added.
AirAsia, the region's largest low-cost carrier, currently operates a fleet of 26 Boeing 737 aircraft.
Boeing officials have acknowledged that capturing the contract was critical for them to regain sales momentum in the market.
The source declined to reveal the cost of the 40-jet deal, saying only: "They are getting it cheaply."
The order would be valued at US$5.2 billion at the catalog price but AirAsia was likely to receive significant discounts, the Wall Street Journal said in a report on the negotiations last month.
Quoting people familiar with the offer, the newspaper said the A320 jetliners were priced well below Boeing's.
The industry source told AFP the first aircraft would arrive in early 2006, followed by one jet each month.
Australia-based managing director for the Centre for Asia-Pacific Aviation, Peter Harbison, told AFP that AirAsia's decision to pick Airbus was bad news for Boeing.
"It is not good news for the US manufacturer since the current fleet consists of Boeing. Five years ago, Airbus was invisible over Asian skies. It is now becoming dominant," he said.
Harbison attributed Airbus's success to better pricing and the ability to meet demand.
"Part of the problem for Boeing is being not able to produce aircraft. After (the terror attack on the US on) September 11, local carriers were not placing new orders and Boeing downsized its labour force.
"Now there is a surge in demand from low-cost carriers and Airbus is in a stronger position to produce. They are also aggressive in pricing," he said.
Harbison said with the new order, AirAsia would have the youngest fleet in Asia, putting the carrier "well ahead of anyone else."
AirAsia has set its sights on a fleet of 80 aircraft and is expected later to take an option to buy or lease 40 more Airbuses.
The three-year old no-frills carrier has expanded from a two-jet operation to become Asia's leading economy airline, carrying 7.5 million passengers since its launch in December 2001.
It operates 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations, and plans a major regional expansion programme.
AirAsia became the first budget carrier to be listed in Southeast Asia in November, when its initial public offering (IPO) was snapped up by investors. - AFP
Courtesy channelnewsasia.com - Wednesday, December 15th 2004