UPDATE 1-Lion Air eyes more jets for growing SE Asia market

Mon Sep 24, 2012 11:28pm EDT

* CEO says airline still needs "a lot" of aircraft

* U.S. analyst says airline poised to place big Airbus order

* Travel demand in Southeast Asia fuelling expansion

By Tim Hepher

PARIS, Sept 25 (Reuters) - Indonesia's Lion Air may add more jets to recent plane orders in order to keep pace with Southeast Asia's transport growth as a U.S. analyst said the airline may place a multi-billion-dollar order with Europe's Airbus.

Lion Air co-founder and chief executive, Rusdi Kirana, said on Tuesday that Southeast Asia's double-digit increase in air travel demand, spurred by economic growth and rising incomes, was set to continue.

"We think that in the next decade we will need a lot of aircraft," he told Reuters in a telephone interview. "The market is growing very fast. We are looking, but it depends on pricing and many other factors. We are talking, but we have not made any decisions."

U.S. aerospace analyst Scott Hamilton said however, that Lion Air was poised to order up to 100 Airbus jets, breaking Boeing's dominance at Indonesia's largest domestic airline.

Orders of 100 aircraft would be worth approximately $9 billion at list prices for 150-seat jets like the Airbus A320 or Boeing 737, but airlines usually negotiate steep discounts.

Officials with Airbus could not immediately be reached for comment.

Lion Air shot to attention in late 2010 when a provisional order for 230 Boeing jets got high billing during a visit to the world's fourth most-populous nation by U.S. President Barack Obama, eager to play up the importance of U.S. exports.

Confirmed in February this year, the record deal took Lion Air's order book to more than 400 planes, which it aims to use to fly across the Asia-Pacific region.

Bolstered by export credits from Western producing countries, airlines in emerging markets have been placing significant bets on air travel in a region where passenger growth outpaces that of developed nations despite some spillover from Europe's debt crisis.

Indonesia's average annual passenger growth is 21 percent, according to Lion Air.

If confirmed, a deal between Lion Air and Boeing's arch-rival could be seen as a turning point after a series of orders that lifted the airline to be one of Boeing's top customers.

Airbus, a subsidiary of EADS, and Boeing, have been locked in a fierce price fight for much of this year, often halving official list prices to take or defend market share, according to multiple industry sources and analysts.

Jakarta-based Lion Air competes with one of Airbus's largest customers, AirAsia of Malaysia, which has itself confirmed plans to order another 100 Airbus jets in addition to a total of 375 already ordered, of which 100 are now in service.

Lion Air this month also announced plans to challenge AirAsia by setting up a new, low-cost airline based in Malaysia as Southeast Asia's growing middle class fuels demand for cheap flights.

The new carrier, Malindo Airways, will begin flights between Indonesia and Malaysia next May with a fleet of 12 Boeing 727 aircraft, which it plans to expand to 100 planes within a decade, Kirana said when announcing the launch.

Lion Air meanwhile, says it is in talks with Boeing to buy 10 787 Dreamliners worth $1.9 billion to tap the long-haul market. The plan would extend an initial deal in June to buy five 787 Dreamliner passenger jets.

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