AirAsia Berhad ("AirAsia" or "the Company") is pleased to announce that it has placed a firm order with CFM International, Inc. ("CFM") for additional CFM engines comprising LEAP-1A engines for 64 A320 NEO aircraft and CFM56-5B engines for 36 A320 CEO aircraft along with 5 CFM56-5B spare engines and 9 LEAP –1A spare engines. The order is inclusive of a 20-year RPFH (Rate per Flight Hour) agreement under the terms of which CFM will guarantee maintenance costs on a dollar per engine flight hour basis for the firm engines ordered. (Collectively the “Engine Purchase Agreement”.)

DETAILS OF THE ENGINE PURCHASE AGREEMENT

The Engine Purchase Agreement is valued at approximately US$ 8.6 billion (based at list price).

RATIONALE FOR THE ENGINES PURCHASE

The engines will be installed to power the Company’s Airbus A320 aircraft order made on 13^th December 2012. This will meet the Company’s rapid expansion plan and fleet requirements.

FUNDING FOR THE ENGINES PURCHASE

The funding for the engines purchase will form part of the funding required for the Aircraft Purchase announced by the Company on 14 December 2012 and it 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 not limited to export credit guaranteed borrowings, conventional and Islamic commercial loans and sale and leaseback transactions.

FINANCIAL EFFECTS OF THE ENGINES PURCHASE

The engines purchase is not expected to have immediate term financial effects. The engines purchase is expected to contribute positively for the financial year immediately following the first year of its delivery and to the future earnings of the AirAsia Group. The engines purchase is not expected to have an adverse effect on the net assets and the issued and paid-up share capital of the Company.

This transaction is a transaction in the ordinary course of business of the Company.

DIRECTORS’ AND MAJOR SHAREHOLDERS' INTERESTS

None of the directors and/or major shareholders of the Company and persons connected to them, in so far as the existing directors and major shareholders are able to ascertain and are aware, has any interest, direct or indirect, in the Engine Purchase Agreement.

This announcement is dated 20 June 2013.

Announcement Info