Malaysian carrier to replace Boeing 737-300s with one type

Fast-growing Malaysian low-fare carrier AirAsia is preparing to issue a request for proposals (RFP) to Airbus and Boeing for new aircraft that is expected to lead to orders for up to 80 narrowbodies.

Industry sources say the Kuala Lumpur-based airline is looking to place firm orders for 40 narrowbodies and take options on another 40. The sources say AirAsia wants just one aircraft type to replace its Boeing 737-300 fleet. Next Generation 737s will be considered, as will Airbus A320-family aircraft.

RFPs are due to be issued in the coming weeks and orders could be placed around the time of the group's initial public offering, which is targeted for September or October. AirAsia has said it hopes to raise around $200 million from the share offering.

AirAsia and recently established associate carrier Thai AirAsia have a combined fleet of 18 737-300s, all but a handful of which are leased from several suppliers. Plans call for the fleet to be expanded to 24 aircraft by October this year and to 36 by June 2005.

Group chief executive Tony Fernandes has said the Malaysian and Thai operations could each be operating 30 aircraft within a few years, as they expand their respective domestic and fledgling international networks.

The sources say AirAsia executives see significant potential for reducing the group's already low cost base with new aircraft. This is in part due to the fact that lease rates have been increasing and the carrier knows it will not be able to get the same rental deals on aircraft when current lease terms expire.

It has until now been able to keep its costs down, in part because it signed many of its deals with suppliers soon after the September 2001 terrorist attacks in the USA, which forced down prices of aircraft and other required assets.

AirAsia was a loss-making full-service airline until new owners acquired it late in 2001 and re-launched it as a strict low-cost, no-frills operator in January 2002. It is one of the fastest growing airlines in South-East Asia and is by far the most successful low-fare operator in the region, where that market segment remains in its infancy.



Source: Flight International