AirAsia, the region's biggest discount airline, unveiled an order for 100 additional Airbus A320 jets, as the carrier expands to fend off competition before being removed from Malaysia's benchmark stock index.
The order included 36 current-generation A320s and 64 fuel-efficient A320neos, Airbus said yesterday.
British Prime Minister David Cameron joined AirAsia chief executive Tony Fernandes at Airbus' wing-manufacturing facility in Broughton, Wales, for the announcement of the contract, valued at US$9.4 billion at list price.
AirAsia, whose shares have fallen 29 per cent this year, is Airbus' biggest customer for single-aisle aircraft worldwide. The airline ordered 200 A320neo aircraft valued at US$18 billion at the Paris Air Show last year. Airbus had already booked the latest order in its tally last month, without disclosing the customer.
"This order is primarily about expansion," Fernandes said. "Business has been very strong in Southeast Asia, especially Thailand, Indonesia and Malaysia, coupled with very robust demand out of China and India."
The airline should have no trouble implementing the new order amid the growth in the regions that AirAsia served, said Arnaud Bouchet, an analyst with BNP Paribas in Singapore.
"I'm not worried about overcapacity as new aircraft delivered will be used as both replacement and new capacity growth," Bouchet said. "With a much higher population and an increasingly affluent middle class, Asia can comfortably absorb additional aircraft in the next 10 years particularly if these airlines start replacing their current fleet."
AirAsia fell 1.48 per cent to 2.67 ringgit (HK$6.75) yesterday. It is one of two stocks that will be removed from the FTSE Bursa Malaysia KLCI Index from December 24 after seeing its market capitalisation fall this year, the country's exchange operator said.
AirAsia has slumped since September amid concern competition may intensify after Indonesia's Lion Mentari Airlines said it would help set up a rival low-cost carrier in Malaysia named Malindo Airways.