AirAsia Has Limited Leverage in the A220 Showdown

Every airshow comes with the same thing - order rumors. The attention these rumors attract reflects the industry's vibrancy. In other words, it's a great thing. This year's Singapore airshow's big rumor is about AirAsia and the A220. Rumors are for 100+50 orders and options. So far, nothing. Rumors from late January indicated Airbus was nearing an agreement to sell approximately 100 A220s to AirAsia, with the deal potentially including options for 50 additional aircraft. If confirmed, this would be AirAsia's first entry into the regional narrowbody segment - the carrier currently operates only Airbus A320-family aircraft. One of the region's key targets for the A220 has been AirAsia from before it was the A220. AirAsia's founder, Tony Fernandes, has flirted with this aircraft since the C Series days. In 2019, Airbus took the A220 on a tour of Asia. Mr. Fernandes has proven himself to be a smart negotiator. He once joked at an Airbus event about how he got John Leahy to dance. He had to sign a deal with Airbus first, of course. Going into the show, rumor has it that AirAsia needs smaller aircraft and is trading off the E195-E2 vs. the A220-300. While both OEMs would like nothing more than to announce a deal, it seems Mr. Fernandes is still squeezing. Both OEMs would be wise to limit their flexibility. Here's AirAsia's single-aisle history with Airbus. As the chart shows, AirAsia has orders for 592aircraft but has only taken delivery of 256 to date. See that patch of white after 2020? AirAsia has also faced some challenging times. [caption id="attachment_189084" align="aligncenter" width="580"] AirInsight[/caption] Is AirAsia likely to be a great customer? Yes. But their buying pressure isn't that great. Let's review their A330-900 order history, which the chart does not address. AirAsia's A330-900 History and an important read for Embraer The Build-Up (2014-2019) December 2014: AirAsia X became the A330neo launch customer, ordering 50 A330-900s (initially signed as MoU, later firmed) 2015-2016: Order increased to 66 aircraft July 2018 (Farnborough Airshow): AirAsia X placed an order with Airbus for an additional 34 A330neo widebody aircraft, increasing the total number of aircraft ordered by the airline to 100. This reaffirmed AirAsia X's status as the largest A330neo customer. August 2019: AirAsia X finalized a firm order for an additional 12 A330-900s, increasing the number of A330neo aircraft ordered by the carrier to 78 (note: this appears to have replaced some of the previous 100-aircraft order, with a mix that also included 30 A321XLRs). Peak order: 78 A330-900s - making AirAsia X by far the largest A330neo customer. First Delivery: August 2019 - First A330neo delivered via lessor Avolon to AirAsia X Thailand. The Collapse (2020-2022): The COVID-19 pandemic devastated AirAsia X's long-haul low-cost model. The airline entered restructuring, reducing liabilities by RM 33.7 billion and repaying just 0.5% of its debt to creditors. Creditors approved the plan in November 2021. In 2022, AirAsia X canceled 63 of its A330neo orders, significantly impacting Airbus, leaving just 15 aircraft in its backlog after pandemic-related challenges. Current Status (2026): Remaining order: 15 A330-900s (down from 78) Operating fleet: A330-300ceo aircraft (approximately 36 aircraft pre-pandemic across Malaysia, Thailand, and Indonesia affiliates) Strategic shift: AirAsia X confirmed plans to become an all-narrowbody operator by the 2030s, retiring A330ceos in favor of single-aisle aircraft rather than replacing them with A330neos Impact on the A330neo Program and Airbus aggravation: The AirAsia X cancellation was catastrophic for the A330neo program: Represented more than 20% of total A330neo orders at the time Removed the program's largest and most vocal customer Came at a critical time when the A330neo was already struggling against 787-9 and A350-900 competition AirInsight covered this as it was a major blow to Airbus's widebody strategy The Irony AirAsia X went from being the A330neo's champion and launch customer—even lobbying Airbus to create the program—to canceling 80% of its order and planning to exit widebody operations entirely within a decade. This represents one of the most dramatic fleet strategy reversals in modern aviation history. Summary No matter what AirAsia decides, the history is clear: seller beware. Airbus -- knows only too well how to deal with this airline's ambition and whims. The scars are fresh, and Airbus will NOT offer AirAsia the screaming deal they want. Indeed, Airbus will want to recover from the losses on the A330-900 deal. In other words, downward flexibility on the A220 is very limited. Another customer could probably get a better deal. If the AirAsia team is clever, they will use a lessor as an intermediary. But that lessor will also be aware of the risk this airline brings and price appropriately. In the end, AirAsia doesn't have any leverage here. Embraer -- Actually, in a great spot. They can price their aircraft to inflict pain on Airbus. The odds of AirAsia buying from them are low. So they can toy with AirAsia all day long. At least up to the point where, if AirAsia decides to actually sign a contract, Embraer is comfortable with the risk. To be clear, Embraer will be wary of risk as they, too, have fresh scars from the Boeing fiasco. AirAsia -- With a tattered reputation, its options are more limited than ever. In mid-January, all AirAsia-branded airlines were housed under a single operating platform, AirAsia Group. This structure brings together short-haul and long-haul operations that were previously separated across listed entities following Capital A's post-pandemic corporate restructuring. AirAsia X was officially rebranded as "AirAsia" on January 19, 2026. Tony Fernandes, the CEO of Capital A, described it as "one of the most emotional moments" of his career. "We are finally closing the most challenging chapter in our history. This represents the culmination of one of the most complex and rigorous restructuring exercises undertaken by an aviation group, since Covid brought aviation to a standstill six years ago." The revised fleet plan is now: Cancelled: All outstanding A330neo orders (the 15 remaining from the original 78) Phase-out: Entire A330ceo widebody fleet within 5-6 years Future fleet: 100% Airbus A320-family (A320neo, A321neo, A321XLR) You can see why we think Embraer is well-positioned to be a deal spoiler. Embraer is just not that hungry. AirAsia, even the latest iteration, carries risk. Long on promise for sure. But still risky. Perhaps that's why we have heard no deal news so far.

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