FARNBOROUGH, England (Reuters) – AirAsia (AIRA.KL) is discussing the potential buy of one other 100 Airbus A321neo jets as the corporate’s chief govt officer, Malaysian entrepreneur Tony Fernandes, and Airbus go all the way down to the wire in parallel negotiations for an expanded order for bigger A330neo jets, business sources stated.
Fernandes could attend this week’s Farnborough Airshow the place the 2 sides will try to finish a tough patch of their relations and agree all or a part of a fancy package deal of wide-body and narrow-body jetliner orders, two sources stated.
However, it remained unclear simply how much recent cash the deal, if accomplished, would put in Airbus’ coffers because the low-cost service juggles present orders and drives a troublesome discount on costs and the dimensions of deposits, one of many sources stated.
Another stated any deal might contain a big variety of conversions or “churn” between present orders. AirAsia has ordered 600 jets, two thirds of which stay to be delivered.
Airbus declined remark. AirAsia couldn’t be reached.
Two sources stated AirAsia might place an order for as much as 100 single-aisle A321neo jets price $13 billion at listing costs, as reported by Bloomberg News.
A 3rd supply instructed it might contain an improve from smaller fashions, which can set off different orders. None of the sources, who’re accustomed to the matter, agreed to be quoted on confidential talks.
The vary of choices underscores the complexity of AirAsia’s portfolio as it expands. But regardless of the lure of a 100-plane order, all eyes are on whether or not AirAsia will affirm the A330neo, since there is no such thing as a drawback promoting the smaller single-aisles.
AirAsia, Asia’s largest funds service, has been sending blended alerts for months about whether or not it will affirm its earlier deal for 66 of the upgraded A330neo – watched from afar by Boeing Co (BA.N), which hopes to interchange the order with its 787 Dreamliner.
Delegates say Airbus wants a advertising and marketing raise for its A330neo and would relish bringing Fernandes to the extensively publicized Farnborough Airshow to reconfirm and develop his order.
That’s as a result of dropping the A330neo’s largest purchaser might make bankers tighten their phrases for financing the identical aircraft for different airways, and due to this fact damage gross sales much more.
However, sources have stated relations between the businesses cooled following current Airbus administration modifications.
An AirAsia order would sign that ties between Airbus and its largest Asian buyer have improved, although Airbus has signaled a drive to guard revenue margins.
Financiers speculate AirAsia will push for reductions as excessive as 60 p.c for the A321neo and two thirds for the A330neo. Standard business reductions are nearer to 50 p.c.
Depending on negotiations, the amount of cash handed over on day one alongside any new AirAsia order could possibly be small.
“This deal is worthless in terms of (upfront) financial commitment,” the primary supply informed Reuters.
Additional reporting by Victoria Bryan, Anshuman Daga, Jamie Freed; Editing by Leslie Adler