AirAsiaX seeks connectivity with $6 bln Airbus jet deal

Reuters

By Tim Hepher

PARIS, Dec 18 (Reuters) - Malaysian budget carrier AirAsiaXplaced a $6 billion order for 25 Airbus A330-300aircraft on Wednesday in a bid to challenge network carriers bypiggy-backing off the success of Asia's largest low-costairline, AirAsia.

Malaysian entrepreneur Tony Fernandes, whose AirAsia grouphas already ordered more than 500 smaller Airbus planes,described the move as a bid to set up the low-cost equivalent ofa major connecting carrier such as Dubai's Emirates.

"It's time to take the next step and build the equivalent ofan Emirates in the low-cost arena," he said.

AirAsiaX plans to build long-haul bases on the back ofAirAsia short-haul networks, focusing initially on a corridor ofdemand from North Asia to Australia via Southeast Asia.

AirAsiaX said it would have 57 owned or leased wide-bodyjets by 2019.

Passengers will be able to switch between aircraft operatedby no-frills airlines using the same brand at hubs across Asia,starting with existing bases in Thailand and Indonesia.

"Having low-cost narrowbody (jets) criss-crossing Asiaenables us to have a big market," Fernandes said.

"Having a bunch of A330s criss-crossing a much larger partof the world enables us to have an unassailable network in thelow-cost market."

Singapore's Scoot and Nok Air of Thailand announced plansthis week to set up a new low-cost airline based in Bangkok.

Typically, low-cost airlines in the United States and Europehave focused on short-range flights, while legacy carrierscompete with major Gulf airlines to handle long-term traffic.

Fernandes said AirAsiaX would restart flights to Europeusing the two-engined A330s in 2016, or earlier if it canimprove the economics of four-engined A340 jets in its fleet.

Flights using the thirstier four-engined A340s to London andParis were halted in 2012 due to high fuel prices.

AirAsiaX has yet to select engines for the new A330s,Fernandes said. The airline is seen likely to order the sameGeneral Electric engines as on existing AirAsiaX jets.

The carrier said it had options for another 10 of the Airbus A330 planes. The newly ordered planes will be configuredto hold 377 passengers and be used for flights over 4 hours.

AirAsiaX Chief Executive Azran Osman Rani said he expectedstrong Asian demand in the future given that low-cost airlineshad not penetrated the market in that part of the world as muchas in Europe or the United States.

"I will bet my bottom dollar that this is not the last orderwe will place," he told Reuters.

Both he and Fernandes reiterated interest in a revampedversion of the A330 with improved engines - echoing thesuccessful relaunch of the A320 with new engines from 2015.

Sitting alongside Fernandes at a Paris signing ceremony,Airbus officials said they would look at the idea, but industrysources said there was no indication that such a project wasclose to being launched.

The A330 has enjoyed a renaissance of sales in recent yearsas the competing 787 Dreamliner ran into delays.

Wednesday's deal is the largest single airline order for thecurrent generation of Airbus A330 wide-body jets.

Fernandes said AirAsia also plans to return to the Japanesemarket after ANA agreed this year to buy AirAsia out of a budgetairline venture, dissolving a loss-making alliance.

He did not provide details of the plan, which he said wouldbe announced soon.

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