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Nikkei Markets

AirAsia orders 100 Airbus planes to bolster long-haul arm

The $30bn deal will allow flights to London, Vienna and Prague

KUALA LUMPUR (Nikkei Markets) -- AirAsia Group Thursday said it has ordered 100 units of A330neo aircraft for its long-haul arm AirAsia X in a $30 billion deal as Asia's largest budget carrier by fleet aims to fly to far flung destinations in Europe.

Deliveries will start from the third-quarter of 2019, AirAsia Group Chief Executive Tony Fernandes said at a news conference. The new aircraft will help AirAsia X fly out of Malaysia, Thailand and Indonesia to London among other European cities such as Vienna and Prague, he said.

"We are looking at flights to Scandinavia (like) Stockholm (in Sweden) via Bangkok, while the London route has not been confirmed yet," he said. Each aircraft carries a price tag of $296.4 million at 2018 list prices.

AirAsia Group's fleet expansion comes as the industry braces for a surge in passenger traffic buoyed by swelling disposable income of middle-class population particularly in Asia. That could fuel demand for more than 15,000 planes from about 6,600 aircraft currently in service in Asia, Airbus' forecast shows.

AirAsia Group operates a fleet of 143 planes that flew more than 67,000 flights at the end of March. As a group, AirAsia has placed orders for some 600 aircraft with Airbus, making it one of the largest Airbus operators in the world.

"Long haul low-cost is something we strongly believe in, and this order shows our confidence in the AirAsia X model," said AirAsia X Group Chief Executive Kamarudin Meranun. "We have arrived at an aircraft that we are confident will allow us to expand our offering beyond Asia Pacific to rest of the world."

On top of the 100-aircraft new order, Fernandes said AirAsia X Thailand will take delivery of two aircraft through a leasing agreement with Airbus, which is expected to be delivered in first quarter of the next year.

Meanwhile, AirAsia X CEO Benyamin Ismail said the company will receive three aircraft next year, which will be used for flight to North Asia from Kuala Lumpur. In 2020, the company will take delivery of up to six planes which will be allocated to Indonesia, Thailand and Malaysia, he added.

In a separate statement, AirAsia Group said it has started talks with Airbus to develop an industrial aviation centre in Malaysia. Options under consideration include maintenance, repair and overhaul facilities, training centre, data centre and possible industrial cooperation, it said.

"The project will commence with a proposed feasibility study to be carried out over 18 months, including a detailed technical, marketing and finance analysis," AirAsia said.

Shares of AirAsia rose 0.6% to 3.23 ringgit apiece on Thursday, while AirAsia X was flat at 0.355 ringgit. The FTSE Bursa Malaysia meanwhile ended 0.4% higher.

--Gho Chee Yuan

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