AirAsia's Fernandes looking for more planes

Malaysia's AirAsia boss Tony Fernandes smiles during its annual general meeting in Sepang outside Kuala Lumpur June 20, 2011.

KUALA LUMPUR (Reuters) - Less than two weeks after giving Airbus Industries (EAD.PA) a record-breaking $18 billion order for 200 aircraft, AirAsia (AIRA.KL) chief Tony Fernandes has even bigger plans for his budget airline, already Asia's largest.

The 47-year-old Malaysian told Reuters he saw AirAsia as a 500-plane airline, which would make it second only to America's Southwest Airlines.

"Though we look aggressive, we have expanded very cautiously," he said in a telephone conversation from London. "But I have always said this airline is worth at least 500 aircraft.

"When we get there depends on how many joint ventures we do and all the other equations that come in."

And the focus will be on short-haul routes and organic growth.

AirAsia, which flies to 63 destinations in more than 20 countries, has 90 planes currently, almost all single-aisle Airbus A320s. Besides the 200 Airbus A320neo it ordered last month, it has another 75 Airbus aircraft already in the pipeline, and which Fernandes said he was keeping on order.

"Our risk is making sure we manage growth and keep focus," Fernandes said.

There is a huge surge in air travel in the region, with India and China the fastest growing.

According to consultancy Frost & Sullivan, airline growth is shifting away from North America and Europe to Asia.

"It is expected to follow a different pattern from that which brought the North American and European markets to maturity," the consultancy's Kunal Sinha said.

"Narrow body aircraft are expected to form the bulk of the orders instead of turboprop and regional jets.

"Boeing has recently forecast that the Asia Pacific region would require 11,450 aircraft worth US$1.51 trillion till 2030. Asia Pacific will account for approximately 30 percent of the global delivery."

COMMITTED TO AIRBUS

AirAsia is planning to list its operations in Indonesia and Thailand this year, and is also looking to open a hub in Singapore, Fernandes said. But the focus will be on short-haul flights.

"If you look at many airlines, they have maintenance bases, they have cargo, they have long-haul," he said. "We've kept the airline very, very focused on short-haul.

"We've never really looked at non-organic growth," Fernandes added. "I generally think mergers are value-destroying and we would just grow organically."

Fernandes is strongly committed to Airbus, and says rival Boeing (BA.N) will struggle to match the A320neo, which promises 8 percent cash operating cost savings compared to the existing A320.

"Building a new aircraft, I don't believe anyone in aviation history has been able to do it on time.

"We have a fantastic relationship with Airbus. I credit them tremendously with our growth and I want to be more than just a customer of theirs."

Fernandes is much more than an airline owner. He also owns the Team Lotus Formula One squad and until recently was linked with a possible investment in West Ham United football club, which he has supported since he was a boy.

But the West Ham deal appears to be off for now.

"The relationship between the owners and myself ... I don't think we are meant to be," he said.

Fernandes and his partners are also owners of niche sportscar marker Caterham.

For more on the Airbus order and for a Newsmaker on Fernandes please click on:

For a story on Asia's budget airlines click on:

(Editing by Jane Merriman)