AirAsia Berhad (“AirAsia” or “the Company”) is pleased to announce that it has signed an agreement (“Aircraft Purchase Agreement”) with Airbus S.A.S (“Airbus”) to purchase an additional fourteen (14) Airbus A320 CEO aircraft (“A320 CEO Aircraft”).
The fourteen (14) A320 CEO Aircraft will add to the three hundred and ninety-nine (399) aircraft to be delivered in the course of the next 12 years until 2028.
To date the Company has taken delivery of one hundred and seventy-one (171) A320 CEO aircraft and eight (8) A320 NEO aircraft.
The additional Aircraft Purchase Agreement was signed in Paris on 22 June 2017.
DETAILS OF THE A320 CEO AIRCRAFT PURCHASE
Pursuant to the Aircraft Purchase Agreement, the fourteen (14) A320 CEO Aircraft will be delivered in the following years:
- Ten (10) aircraft in 2018
- Four (4) aircraft in 2019
Each of the A320 CEO Aircraft will be delivered with the fuel saving sharklet wing tips.
RATIONALE FOR THE A320 CEO AIRCRAFT PURCHASE
AirAsia Group will be accelerating growth in 2018 and 2019 to further strengthen its competitive and market leadership position in all key markets namely Malaysia, Indonesia, Thailand, Philippines and India largely driven by better than expected performance, favourable market demand and low fuel price environment but is currently facing shortage of aircraft for expansion. There is limited opportunity for AirAsia to advance more A320 NEO aircraft from its future orderbook to 2018 and 2019 due to the limited production of A320 NEO aircraft as it is a new aircraft manufactured by Airbus (the A320 NEO delivery stream from Airbus only commenced delivery from 2nd half of 2016). Hence the Company has made the decision to purchase fourteen (14) A320 CEO Aircraft to support the short-term growth and expansion requirements in 2018 and 2019.
In addition to the above, Japan Civil Aviation Bureau (JCAB) has not certified A320 NEO aircraft in Japan. Hence, AirAsia will require A320 CEO Aircraft for expansion in Japan.
FUNDING FOR AIRCRAFT PURCHASE
Similar to previous aircraft deliveries, the additional aircraft purchase will be funded by a combination of borrowings, Company's internal reserves and cash generated by its operations. The external sources of funding include but are not limited to export credit guaranteed borrowings, conventional and Islamic commercial loans and sale and leaseback transactions.
FINANCIAL EFFECTS OF THE AIRCRAFT PURCHASE AGREEMENT
The additional purchase will not have any immediate financial impact on the financial position of the Company. As with past deliveries, these additional aircraft will be gainfully deployed within the AirAsia Group to support the increasing demand and the planned expansion of our network and affiliate airlines. This transaction is expected to contribute positively to the future profitability and cashflow of the AirAsia Group.
APPROVAL REQUIRED
The Aircraft Purchase Agreement is subject to the approval by the Board of Directors of AirAsia.
AirAsia does not require the approval of its shareholders or any authorities to enter into the Aircraft Purchase Agreement.
DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
None of the directors and/or major shareholders of the Company and persons connected to them, insofar as the existing directors and major shareholders are able to ascertain and are aware, has any interest, direct or indirect, in the proposed Aircraft Purchase Agreement as mentioned above.
This announcement is dated 23 June 2017.
