AirAsia Signs Two Deals in Two Days, Worth RM61 Billion

14th Jul 2016

Sound negotiations tactics have netted AirAsia two lucrative deals in just two days – one for 100 new aircraft and one for the engines to power them – for a total of RM61 billion.

The first deal is for 100 Airbus A321neo jetliners. The deal with the French aircraft manufacturer is reportedly worth RM49.9 billion ($12.6 billion), while the second deal is for the engines to power them and AirAsia had agreed to pay CFM International RM10.7 billion ($2.7 billion) for 200 engines.

Both deals are based on catalogue prices and come as a continuation of a very good week for the Malaysian airline company after AirAsia was named “Best Low-Cost Airline” in both the world and Asia at the Skytrax Airline Awards in London for the eight consecutive year.

CEO of AirAsia Group Tony Fernandes was understandably ecstatic about this, saying:

AirAsia was the belle of the ball… RM61 billion in two days. I feel very good.

AirAsia Has 480 Planes on Order and 170 in Operation Across its Network

Currently, counting the new 100 A321neo planes, AirAsia Group has 480 aircraft on order and operates more than 170 in Malaysia, Thailand, India, Indonesia and the Philippines.

Fernandes said upon making the deal for the new jets:

The A321 plane is an exciting step forward like the move from the B737 aircraft (AirAsia used those in its early years) to the A320s.

Fernandes didn’t say how AirAsia intends to fund the 100 planes, but it will probably do so via some kind of an aircraft funding scheme, paying for the planes as they reach their delivery dates.

100 Million/Year Passengers Mark Not That Far From AirAsia

However it decides to do it the new jetliners will certainly go a long way to help Mr Fernandes realize his dream of carrying 100 million passengers in one year. In 2015, the LCC carried over 50 million passengers, thanks to an 11 per cent increase from the previous year.

Fernandes and his partner Kamarudin Meranun bought the bankrupt AirAsia for only RM1 and agreed to take on its RM40 million debt. Looking at it now, it is clear they made a sound business decision as the airline continues to grow.