AirAsia Berhad (“AirAsia” or “the Company”) wishes to announce that it has today signed an amendment agreement (“Amendment Agreement”) with Airbus S.A.S (“Airbus”) for the revision of the delivery dates of seven (7) Airbus A320 aircraft originally scheduled for delivery in 2011 to the year 2015.

1.         Salient terms of the Amendment Agreement

(a)       Under a Purchase Agreement (of 11^th March 2005) and a number of amendment agreements entered into between Airbus and AirAsia (collectively “the Purchase Agreement”), AirAsia has agreed to a firm order of 175 Airbus A320 aircraft which schedule of delivery runs from December 2005 to October 2014.

(b)       Under the latest Amendment Agreement the parties have agreed to defer the delivery schedule of an additional seven (7) aircraft in 2011 (“2011 Aircraft”) to the year 2015 as follows: 

Original Scheduled Delivery Months	Revised Scheduled Delivery Months
March 2011	April 2015
April 2011	May 2015
May 2011	June 2015
June 2011	July 2015
July 2011	August 2015
July 2011	September 2015
October 2011	November 2015

 

(c)       With the above deferment, the delivery of 15 aircraft in 2011 shall be reduced to 8 aircraft.

            (d)      The number of deliveries in 2015 will also be increased from 2 aircraft to 9 aircraft.   

            (e)        No penalties are payable by AirAsia in revising the delivery schedule of the 2011 Aircraft. 

2.         Rationale

The rationale for the deferral of the 2011 Aircraft is similar to the rationale for the deferral of the 2010 Aircraft in August 2009 in that AirAsia foresees     infrastructural constraints with the current airport facilities.

Until the new LCCT is constructed, the present infrastructure at the low cost terminal is not able to accommodate AirAsia’s fleet expansion in the number of aircraft originally scheduled to be delivered in 2010 and 2011. 

The rationale to further scale down on the delivery of aircraft in 2011 is to enable AirAsia to optimize its fleet and avoid the costs associated with leaving idle or underutilized aircraft due to infrastructural limitations – avoiding having to incur depreciation, interest expense and other costs without earning revenue.

3.         Directors’ and major shareholders’ interests

No directors and/or major shareholders of AirAsia and/or persons connected with them have any interest, whether directly or indirectly, in the Amendment Agreement.

4.            Directors’ opinion

The Board having considered all the relevant factors in respect of the Agreement is of the opinion that entering into the Amendment Agreement is in the best interest of the Company.

5.            Financial effect of the Amendment Agreement

The Amendment Agreement is not expected to have any material impact on the financial position of AirAsia for this current financial year but may to a limited extend impinge on the earnings growth in the short term period .

6.       Approval required

AirAsia does not require the approval of its shareholders or any authorities to enter into the Amendment Agreement.

7.         Document available for inspection

The Amendment Agreement is available for inspection at the registered office of the Company at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia during normal business days from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 4 August, 2010