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AirAsia defers taking 7 new Airbus planes

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Asia's largest budget airline has deferred the delivery of seven A320 ordered from European planemaker Airbus to 2015 instead of next year.

 

Asia's largest budget airline, AirAsia Bhd (5099), has deferred the delivery of new aircraft for a third time, blaming capacity constraints at the existing low-cost carrier terminal (LCCT-KLIA) in Sepang.

 

It has deferred the delivery of seven A320 ordered from European planemaker Airbus to 2015 instead of next year.

 

AirAsia's deferment now numbers 23 A320.

 

It postponed the delivery of new aircraft for the first time in July last year, for eight A320 it was to have received this year. The second deferment was in October, for another eight slated for delivery next year.

The latest deferment brings the number of new planes to be delivered next year down to eight and those it will receive in 2015 up to nine.

 

The orders in 2007 for a total of 175 A320 were initially over delivery schedules from 2010 to 2014.

 

In 2007, the airline was still operating out of the existing LCCT-KLIA.

 

"Until the new LCCT is constructed, the current 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," it told Bursa Malaysia yesterday.

 

The new LCCT is expected to be ready by March 2012.

 

When announcing the first set of deferments in July last year, AirAsia group chief executive officer Datuk Seri Dr Tony Fernandes had said that it would deploy most of the planes to its Indonesian and Thai operations.

 

The latest deferment appears to point to a change in its plans.

 

Fernandes had warned of another round of deferments during its first quarter teleconference with analysts and media in June.

 

He said the airline would look to reducing rollouts to match cash flow.

 

"We want to maintain our current gearing level," Fernandes had said.

 

AirAsia's net gearing ratio as at March 31 this year was 2.25 times.

 

 

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/paff-2/Article/index_html#ixzz0vhSBPNF4

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I think they have no choice but to defer the deliveries because:

 

1 LCCT is delayed

 

2 VietJet AirAsia stalled due to Vietnamese govt. protection - so they are not sending any planes there. Thai and Indonesia AirAsia's fleets are almost complete

 

3 They are running out of new routes - that is why they are now considering Australian domestic ops

 

4 They need to take a breather to consolidate. The customer service issues must be improved before they grow again

 

5 When those new planes come in 2015, they might want to think about selling their older planes

 

So overall business outlook may not be that great from now on. Malaysian govt. is also not helping much with their problems with bureaucracy. So they do need to slow down - otherwise cash outflows will bleed them!

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I think they have no choice but to defer the deliveries because:

 

1 LCCT is delayed

 

2 VietJet AirAsia stalled due to Vietnamese govt. protection - so they are not sending any planes there. Thai and Indonesia AirAsia's fleets are almost complete

 

3 They are running out of new routes - that is why they are now considering Australian domestic ops

 

4 They need to take a breather to consolidate. The customer service issues must be improved before they grow again

 

5 When those new planes come in 2015, they might want to think about selling their older planes

 

So overall business outlook may not be that great from now on. Malaysian govt. is also not helping much with their problems with bureaucracy. So they do need to slow down - otherwise cash outflows will bleed them!

 

Or could it be : -

 

1 Others have "catched up"? Fyi, MH recorded higher growth than AK over the past few months ( ex KUL see airport statistics forum) and so as others including GA, SQ, TG and 3K.

 

2 Financing ? Credit overstreched? Financial Crisis?

 

IF it's none of the above, the original plan should move forward by...

 

1 Perhaps this set of aircraft could be used to reinforce other subsidary, for instance QZ's home country has 10 times bigger population based compared to Malaysia, expanding that area may be worth to consider.

 

2 Expand secondary bases in Malaysia such as BKI / KCH / PEN or JHB with these new birds. Or has it reached it's max at these points , if 320 is too big, opting for smaller 319s or 318s may be worth thinking, as training is minimal and Cabin crew can be reduced to just 3 perhaps? Afterall, a 120 seater 318s may be easier to fill up for flight originating from JHB / PEN / BKI / KCH. Cheaper OPEX?

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Why no BKI - ICN on AK? :(

Might be because the flying time is more than 4 hours. Those cramped A320s are not comfortable for long flights. Or they might follow the TPE method and let D7 establish the market first before AK moves in.

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Or could it be : -

 

1 Others have "catched up"? Fyi, MH recorded higher growth than AK over the past few months ( ex KUL see airport statistics forum) and so as others including GA, SQ, TG and 3K.

 

2 Financing ? Credit overstreched? Financial Crisis?

 

IF it's none of the above, the original plan should move forward by...

 

1 Perhaps this set of aircraft could be used to reinforce other subsidary, for instance QZ's home country has 10 times bigger population based compared to Malaysia, expanding that area may be worth to consider.

 

2 Expand secondary bases in Malaysia such as BKI / KCH / PEN or JHB with these new birds. Or has it reached it's max at these points , if 320 is too big, opting for smaller 319s or 318s may be worth thinking, as training is minimal and Cabin crew can be reduced to just 3 perhaps? Afterall, a 120 seater 318s may be easier to fill up for flight originating from JHB / PEN / BKI / KCH. Cheaper OPEX?

 

Actually the deferment of deliveries applies for the AK only I believe. KUL will be the last to expand in the next 2 years to come, or maybe until when they move out to the new LCCT or when MAHB decides to find a temporary solution to accommodate more A320s. You have to take into account that D7 is expanding without a full stop. Currently, parking bays are being shared amongst the two, and it can get very ugly at times too when an A330/340 is already on taxi to its assigned bay while the AK A320 is still not out yet. We call it a towing frenzy daily over here, with most planes being parked inside, outside and beside the hangar and some outside SAE hangar during nitestops. I believe that this 2 year period is going to be slow for AK as TF will start axing the non profitable routes and increase capacity on routes that are making more profit and/or including some new destinations. Expansion in PEN/BKI wouldn't be a problem I believe, but the biggest obstacle is with shortage of both flight and cabin crew. Hopefully, it will be settled by the year end. With no more nitestops of aircraft in both JHB and KCH, I believe we need not talk about development there either.

 

On the other hand, QZ is left with only 4 737s operating while FD is only left with 2 737s operating. They definitely have already drawn up an expansion plan for the next few years to come, and accelerating it without doing much consideration can only lead them to their downfall. :drinks:

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Might be because the flying time is more than 4 hours. Those cramped A320s are not comfortable for long flights. Or they might follow the TPE method and let D7 establish the market first before AK moves in.

 

I mean would it be possible for AK to open the BKI - ICN route in near future and fly it with their A320. KE is using their 737NG and MH may follow suit soon. Not much chance to use the A330 in this route I believe.

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