AirAsia seeks jets for growth but restructuring first priority: CEO

Business Standard

18-06-2025

Airline entrepreneur Tony Fernandes, CEO of AirAsia owner Capital A Group, said on Wednesday he is in talks to buy 50 to 70 Airbus A321XLR jetliners, but signalled the first priority was to complete the group's restructuring.
Asia's largest low-cost carrier also remains in talks to buy 100 smaller Airbus A220 or Embraer E2 regional jets but Fernandes, a veteran of eye-catching order announcements, all but ruled out an expected deal at this week's Paris Airshow.
"I don't think there'll be an order at this air show. Were still doing a lot of work with Airbus and other (manufacturers).... I think we'll look to do something imminently, in the next 1-3 months," Fernandes told Reuters in an interview.
"We want to make sure we clear out of our restructuring. The great thing is, we're back in the growth stage." The Malaysia-based low-cost carrier operates an all-Airbus fleet and is one of Airbus' biggest customers, having staged a series of dramatic air show finales after last-minute talks.
The comments came after industry sources said AirAsia was in advanced discussions to place an order for at least 100 Airbus A220 regional jets at the Paris Airshow, with rival Embraer also vying for a chance to win a major breakthrough for its E2 jet.
Two industry sources said Airbus had made an "aggressive" offer to boost orders for its A220 and win a launch customer for a new 160-seat version, or kickstart a larger version still on the drawing board, but that barring any further twist in negotiations on Wednesday the talks had stalled partly over financing.
"There is no deal," one of the sources said.
One of Airbus' biggest customers with over 350 planes on order, AirAsia has not placed an order since the pandemic, but ended a gap in deliveries by taking four Airbus jets last August, marking what it described as a new growth milestone.
It has been steadily restructuring its order book as it faced financial difficulties after a slump during COVID-19.
The company, hard hit by pandemic travel restrictions, was classified by Malaysia's stock exchange as financially distressed in 2022. It says it hopes to exit this so-called PN17 status by the middle of this year as it pursues a recovery.
NETWORK EFFECT
Capital A plans to sell its AirAsia aviation business to long-haul unit AirAsia X to consolidate long and short-haul operations under a single AirAsia brand.
The group also needs consent letters from creditors, of which it has "virtually all of them," Thai Stock Exchange approval, and to raise new capital.
"I am hoping we can wrap up this process in June and complete everything by the end of July .... We are getting closer to my liberation day, not Donald Trump's liberation day," Fernandes said in a play on the nickname for US tariffs.
He said new investors had been "locked in," but declined to provide specific details ahead of any formal announcement.
Bloomberg reported in March that the Saudi Public Investment Fund was set to invest in AirAsia.
"We never confirmed (PIF) or not, but we have all our capital locked in and as soon as we get the consent letters and the Thai Stock Exchange we will announce who the new capital is," Fernandes said.
AirAsia has led a boom in low-cost carriers in the region in the past two decades as incomes rose. Such carriers offer bargain fares by driving costs as low as possible, with large fleets of one aircraft type driving efficiencies of scale.
Fernandes said the airline was ready to tweak that approach by picking smaller planes in a different category.
What does the network need? It needs lots of frequency and it needs the ability to go to more destinations.
Fernandes said he is still in discussions with China's COMAC about a potential order for its C919 narrowbody aircraft, though trade tensions between China and the US - which sources say has suspended engine deliveries - remain a possible obstacle.
We received an offer from COMAC. The geopolitics don't help ... we need to be confident that that's going to be OK, but it's a good aircraft and well certainly look at it.