AirAsia Group has converted its order for 13 Airbus A320s that have yet to be delivered to the larger A321neos. The conversion, made through an amendment agreement made with Airbus, raises its total order for the A321neos to 362 aircraft. These aircraft will be allocated to carriers within the AirAsia Group based on demand, with deliveries scheduled to take place until 2035.

Capable of accommodating up to 236 seats in a single class layout, the A321neos are equipped with Airbus’s Space-Flex Cabin configuration to allow a more efficient configuration of the cabin space, says AirAsia Group in a 6 October statement.

Bo Lingam, AirAsia Group’s airline president, says the group’s network and fleet strategy were “thoroughly reviewed” to ensure flying on the most popular and profitable routes, ahead of travel resumption on its network. 

“Our business model is robust, and there is a lot of pent-up demand. We are confident that our airlines will be able to rebound and recover strongly as soon as travel restrictions are lifted,” says Lingam. Without elaborating, Lingam indicates that AirAsia Group looks forward to operating an all-A321neo fleet, which will further solidify its low-cost base and lean cost structure. 

He goes on to say that the A321neos will eventually replace the older A320s, where the fuel savings will lead to reduced carbon and nitrogen oxides emissions, as well as reduced engine noise. Out of the 211 A320 family aircraft AirAsia Group operates, 169 of them are A320s, alongside 38 A320neos and four A321neos.

This order conversion builds on an earlier order conversion made by AirAsia Group. In June 2019, Airbus announced that AirAsia would convert 253 orders for the A320neos to the larger A321neo.

Tony Fernandes, AirAsia’s group chief executive, noted that as travel restrictions begin to ease and that cargo activities in its key markets begin to resume, there is a need to ensure that its fleet is efficient in terms of cost and fuel, and optimized for airline operations and that of its logistics venture Teleport.

Christian Scherer, Airbus chief commercial officer and head of Airbus International, welcomed the order conversion made by AirAsia, noting that the conversion is “another endorsement” of the type being the most efficient and popular single-aisle aircraft. He adds: “We are encouraged to see traffic rebound around the world as the travel restrictions ease. AirAsia will be well equipped to benefit from the rebound that will also surely come in Asia, thanks to the combination of pent-up demand, the efficiency of its Airbus fleet and its unique brand”.

AirAsia secures approval for guaranteed loan from Malaysian institution

A day before the order conversion statement was released, AirAsia Group disclosed that it had received approval from Malaysia’s financial guarantee insurer, Danajamin Nasional Berhad (DNB), for an 80 percent guaranteed loan of up to RM500 million. This guarantee is being provided under the Danajamin Prihatin Guarantee scheme and is part of the Malaysian government’s economic stimulus package following the Covid-19 outbreak.

AirAsia Group says the guaranteed loan was approved by its lenders under a club deal term financing and will be provided by DNB through Syarikat Jaminan Pembiayaan Perniagaan, a wholly-owned entity of the Malaysian finance ministry. The company indicates financing of the club facility has been earmarked for its working capital purposes and will support staff costs and key operating expenditure such as aircraft maintenance, ahead of an expected reopening of Malaysia’s interstate borders and that of international countries.

“This approval from the Malaysian government is a strong endorsement of AirAsia Group’s ability to recover fast and provides a welcome boost to our overall fundraising strategy as we prepare to return to the skies in all of our key markets,” says AirAsia’s executive chairman Kamarudin Meranun.

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