Airbus secures 200 jet order from AirAsia

Airbus has cranked up the pressure on Boeing to respond to the European aircraft maker’s decision to re-engine its A320 narrowbody jet after securing one of the biggest orders in the industry’s history from AirAsia, the fast-growing budget airline.

The 200 jet deal for the A320 Neo from the Malaysian-based airline, headed by the flamboyant entrepreneur Tony Fernandes, puts the seal on a highly successful week for the Toulouse-based subsidiary of EADS at the Paris Air Show, securing Airbus’s best performance at a show in order numbers.

In total, Airbus received orders and commitments for 730 aircraft at the show at Le Bourget this week, with a list price in excess of $72.2bn. This compares to 111 orders and commitments for Boeing, valued at $17.bn. That figure excludes a few orders from customers that Boeing announced but had previously held on its books as unidentified.

Senior executives at Airbus said other orders could be forthcoming by the end of the week, with a possible Qatar Airways deal for A380s in the final stages.

The AirAsia order – Airbus’s biggest in terms of jet numbers – is valued at $18bn at list prices, though AirAsia will have secured generous discounts.

Airbus’s performance has been underpinned by the success of the A320 Neo, which secured 667 orders and commitments this week, giving it a total of more than 1,000 since its launch at the end of last year. Airbus claimed the Neo has become the fastest- selling airliner in the history of aviation.

Tom Enders, Airbus chief executive, said the deal was the “strongest endorsement yet” of the decision to upgrade the A320. The new version promises to cut fuel costs by 15 per cent, using new engines and minor redesigns to the wing.

Jim Albaugh, head of Boeing’s commercial aircraft business based in Seattle, dismissed the Neo this week by arguing that it was merely bringing the A320 up to the standard of the rival Boeing 737.

On Thursday, Mr Enders responded: “We’ve had more than 600 orders for A320 Neo in this show. If our colleagues in Seattle still maintain it is only catching up with their 737 I must ask myself what these guys are smoking.”

Boeing is coming under increasing pressure from airlines to respond to the A320Neo as both incumbents face threats from new entrants in the narrowbody market. The US group has said it will decide by the end of this year or early 2012 whether to re-engine the 737 or build an all-new aircraft.

The AirAsia deal reaffirms the rapid rise of Asia’s largest budget airline, which is now Airbus’ biggest customer for narrowbody jets. It flies 2m passengers a year, up from 200,000 a decade ago. Mr Fernandes plans to grow the fleet from 104 aircraft to 500 over the next decade.

Mr Fernandes, whose approach has echoes of Virgin’s Richard Branson, provided an interesting insight to the contract negotiations with Airbus. He said he insisted that the senior executives went to a nightclub with him before signing the memorandum of understanding and told John Leahy, Airbus head of sales, that there would be no deal unless he danced.

“AirAsia is clearly at the forefront of the budget airline industry so this new order will propel it into a different league,” said Singapore-based analyst Shukor Yusof with Standard & Poor’s.

Additional reporting by Jennifer Pak in Kuala Lumpur

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