July 3, 2018 / 9:38 AM / a year ago

AirAsia heaps pressure on Airbus over A330neo order

SINGAPORE (Reuters) - AirAsia X Bhd (AIRA.KL) needs to ensure the price, performance, engines and payment terms for the Airbus (AIR.PA) A330neo are right before it will “finally confirm” its order for 66 of the jets, its co-group chief executive said on Tuesday.

The wing of an AirAsia plane travelling from Sri Lanka to Malaysia, October 1, 2015. REUTERS/Olivia Harris

AirAsia X, the long-haul arm of Malaysian low-cost carrier AirAsia Group Bhd (AIRA.KL), is the largest customer for the A330neo, which is struggling for sales relative to the rival Boeing 787 (BA.N).

AirAsia X has a firm order for the fuel-efficient A330neo widebody jets to replace its older first-generation A330s but it has been pushing back the delivery dates.

It has been talking to Boeing about buying the 787-10 jet as an alternative and is likely to make a decision later this year, a person familiar with the discussions previously told Reuters.

The airline’s co-group CEO, Tony Fernandes, said on Twitter on Tuesday that he was visiting Airbus at its Toulouse headquarters to discuss the A330neo and the smaller A321neo.

“We have ordered the 330 but to finally confirm it we must make sure price is right. Performance is right. Engine is right. PDP (pre-delivery payments) is right.” he said. “And performance of the 330 251-tonne is right. If right, (it is) the plane we dreamt of and fought for and then we can order more. Or else.”

Pre-delivery payments are made to manufacturers in the run-up to production and are sometimes financed using loans. It remains unclear to what extent AirAsia has yet paid advances.

The remark is the latest in a series of teasing comments from Fernandes apparently designed to heighten competition between Boeing and Airbus and to take advantage of AirAsia’s position as an anchor customer for the A330neo.

After a series of losses to Boeing’s 787, several analysts have said the future of the A330neo will be under mounting scrutiny if AirAsia abandons its order.

However, with this month’s Farnborough Airshow approaching, Airbus is expected to do its utmost to try to bag at least one alternative order to restore some momentum to the program.

With only 214 A330neos on order - including 66 for AirAsia X and another 28 for IranAir that are unlikely to be delivered due to U.S. sanctions - the program is in need of a fresh boost to mop up more than 15 unsold production slots next year.

The 251-tonne version, which could fly non-stop from Kuala Lumpur to London, is designed to provide more range by improving fuel capacity but will not be available for delivery until 2020.

Fernandes also said on Tuesday he believed the A321neo, a large narrowbody jet, was a “great plane” and raised the prospect of ordering more. He is also the CEO of AirAsia, which has 100 A321neos on order.

Reporting by Jamie Freed and Tim HepherEditing by Christopher Cushing and Edmund Blair

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