AirAsia A321Neo
Last week, a visit by Malaysian Prime Minister Anwar Ibrahim to France signaled something might be coming Airbus’ way. And indeed, so it was.
AirAsia signed an MOU for up to 70 A321 XLRs, which is expected to be converted into a firm order for 50 plus options for 20. Deliveries are scheduled to commence in 2028 and are expected to continue through 2032. Then Malaysian Airlines ordered 20 more A330 NEOs, doubling an existing order.
There could be more deals in the works. AirAsia’s founder, Tony Fernandes, said that he is considering a 150-plane order that would be the ‘final piece’ of the airline group’s fleet strategy. This order will be a competition between Embraer and Airbus. He is considering a smaller, narrow-body aircraft (E2 vs. A220) to complement the AirAsia fleet. A decision could be made as early as August.
A Little History
The Airbus vs. Embraer competition reminds your correspondent of an air show several years ago. Mr Frenandes was present and easy to find among the myriad attendees. He was the only person being followed by a gaggle of flight attendants in uniform. Some were clumping along behind him in ill-fitting red shoes. If only there were a photograph. An entertaining speaker, Mr Fernandes, also has an excellent gift for being present.
This visit, however, was a source of concern for Airbus. That being that Mr. Fernandes was flirting with Bombardier and its new C Series. John Leahy at Airbus did not like this one tiny bit. Your correspondent was traipsing through the show looking for shade and interesting sights. Then the mobile rang with a French number displayed. Answering the phone, I was asked, “Can you see Tony Fernandes anywhere?” “Why yes”, I said, “he’s so easy to spot. Look for the trail of ladies in red”. Then came the key question: “Is he at or near the Bombardier Chalet?” I replied, “I don’t know, but I’ll go take a look.”
So I briskly walked over to the Bombardier Chalet to take a look. Mr Fernandes wasn’t there, but inside the Chalet, there was an unusual air of something pending. Executives were clearly on edge. I had to stay and watch. Then came the request from the staffers: “Everyone, please leave. You can come back in about an hour.” Oh? This is highly unusual.
I went outside and sat across from the front door to see what would happen next. What do you know? Along comes the AirAsia troupe, all red and sweaty. They go into the Chalet. Within 20 minutes, they exit. The AirAsia mission was accomplished. Bombardier President Pierre Beaudoin exited the Chalet immediately thereafter, getting into a black sedan, leaving the show. His mission was not accomplished.
Tony Fernandes was never going to buy the C Series. The purpose of the visit was a signal to ensure that John Leahy would maintain sharp pricing on the next Airbus order. Mr. Fernandes has also played this card with COMAC. The relationship between Airbus and Mr Fernandes has a history.
Your correspondent shares this story to illustrate how the great game is played. Divide and conquer is still the name of the game. Michael O’Leary plays it (unconvincingly), and so did Akbar al-Baker in his day. Airbus will pull out every card it has to play to win the next AirAsia deal. They are masters at this game, having been trained by the best (most annoying) customers there are.
Can Embraer win this deal? It will be their toughest competition ever. They could not beat the EU with LOT, despite everything they threw at the deal. Brazil lacks the financial cachet and political critical mass to compete with the EU. Malaysia isn’t the EU. But, as we have seen, Airbus has deep ties with Malaysia. Mr Fernandes is almost certainly playing that card again.
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