AirAsia Orders 50 Long-Range Airbus Jets in $12 Billion Deal to Extend Global Reach

AirAsia on Saturday announced one of the biggest aircraft purchases in its history. The Malaysian budget carrier signed a deal worth $12.25 billion for 50 Airbus A321XLR jets, with options for 20 more.

The planes will start arriving in 2028 and keep coming through 2032.

According to Tony Fernandes, CEO of AirAsia parent Capital A, the goal is to create "the world’s first low-cost network carrier," something that works like full-service airlines such as Emirates or Qatar Airways, but at a fraction of the cost.

"We pioneered low-cost travel in Asia – now, we are taking it to the next level," Fernandes said. "We gave people in Asean the opportunity to explore Asia – now we want the world to see Asean, and Asean to see the world. The A321XLR and A321LR are the game-changers enabling this vision."

News reports quoting Fernandes said the airline is in advanced discussions with aircraft makers for a potential order of up to 150 planes.

While AirAsia has not yet confirmed the specific aircraft model, it is reportedly talking to multiple manufacturers, including Embraer and Airbus. The airline is expected to make an announcement by next month.

AirAsia signed its latest Airbus XLR deal in Paris, during the Malaysian Prime Minister’s visit to France.

The A321XLR stands for "extra long range." Even as it is a narrow-body jet, meaning it has a single aisle, these new A321XLR jets can fly much farther than regular narrow-body planes.

While a regular A321 can fly about 4,000 miles, the XLR can go up to 4,700 miles. That opens up connectivity options from Southeast Asia to parts of Europe or reach deep into Central Asia and the Middle East.

AirAsia already has a massive order book. The airline group has commitments for over 300 Airbus planes across its operations in Malaysia, Thailand, Indonesia, the Philippines, and Cambodia. This new order adds to 20 A321XLRs they already ordered.

During the Airbus leadership's visit to AirAsia headquarters last year, Fernandez said, “Our commitment to Airbus never faltered, even through the pandemic. As one of their biggest customers, we have an orderbook of 647 aircraft consisting of 612 A320 Family and 35 A330 Family aircraft with another 362 A321neo, 20 A321XLR and 15 A330neo to be delivered over the next decade.”

Talking about the XLRs, AirAsia said in a release, "The A321XLR also offers up to 20 per cent lower fuel burn per seat than the Airbus A321neo aircraft, significantly improving emissions performance and operating efficiency."

The longer range opens up markets AirAsia couldn't reach before. Fernandes mentioned several regions where the airline sees opportunity.

Saudi Arabia tops the list. The kingdom is spending billions on tourism and Fernandes called it a "potential hub" and a priority market for AirAsia along with United Arab Emirates and Bahrain. The airline is also looking at Central Asian countries like Kazakhstan and Uzbekistan. "These are great markets and great for our whole network," Fernandes said during the Paris Air Show.

The ariline also said it plans to open a new hub in the Gulf before the end of the year to tap Europe-bound traffic. The four airports it is considering also includes Ras Al Khaimah in UAE.

China remains strong despite geopolitical tensions. Ferandes said AirAsia is the largest international airline flying into China, serving over 20 destinations. India is "booming" for the carrier.

The first A321XLR won't arrive until 2028. That's partly because Airbus has a huge backlog of orders. But speaking with CNBC at the Paris Air Show last month, Fernandes said the aircraft delivery timing actually worked out during the pandemic recovery.

"In some ways, it's not been bad, because we're coming out of Covid, and so we're getting all our planes back in," he said. "We were lucky in a strange way, that we weren't so affected because we were getting back from the horrible Covid era."

AirAsia will start taking delivery of the shorter-range A321LR version in 2026, with four planes arriving that year. The airline is reportedly trying to negotiate earlier delivery dates for the XLR version.

Having carried over 63 million passengers in 2024, AirAsia wants to carry 150 million passengers annually by 2030. The new aircraft are central to reaching that goal.

Whether this strategy works depends on execution. Operating a network airline is more complex than running point-to-point flights.

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