Airbus wins landmark order worth US$20bil from Lion Air, a challenger to AirAsia

[alberttky 0]

Indonesian air line Lion Air has ordered over 200 passenger jets from French-based European aircraft builder Airbus, according to reports. Lion Air boss Edward Sirait has indirectly confirmed the news.

Sirait told the AFP wire service on Wednesday that he could not give any details because he was waiting figures and documents from his company’s legal department, a statement the news agency took to be confirmation that the sale is to go ahead.

 

It was following up a report in the regional newspaper Dépêche du Midi, which, like Airbus, is based in the south-western French city of Toulouse.

 

“Lion Air is said to have finalised a large order of A320neos before the end of the year [2012],” the paper said on Wednesday, adding that the order may be for as many as 220 planes.

Airbus will publish its annual sales figures on 17 January.

 

Last year Lion Air placed a record order with Boeing, for 239 737s and until now most of its fleet has been built by Airbus’s US competitor.

 

The company needs planes for its expansion plans, which include a low-cost airline in Malaysia to rival its main regional competitor, AirAsia.

 

Lion Air was founded in 2009 and is now Indonesia’s largest private airline, mainly operating in its home country but also in Singapore, Malaysia, Vietnam and Saudi Arabia.

 

http://www.english.rfi.fr/asia-pacific/20130109-indonesias-lion-air-order-over-200-airbuses

[J. Suri 0]

Hmmm...they can buy a lot of plane yet no money to pour on Malindo JV? Can somebody explain this matter to me?

[Amirul Mazlan 0]

Suri, the one who refuse to pay more money is the other party... not Lion.

[alberttky 0]

PARIS: Europe's Airbus has landed a record order potentially worth $20 billion (13.2 billion pounds) at list prices from Indonesia's Lion Air, sources familiar with the matter said on Sunday, smashing rival Boeing's grip on one of the world's fastest-growing airlines.

In a sign of the rising importance of Asian budget carriers for high-tech manufacturing jobs, the deal is set to be announced on Monday at a ceremony overseen by French President Franciois Hollande, the sources said, asking not to be named.

EADS subsidiary Airbus declined comment.

France said earlier Hollande would meet Airbus Chief Executive Fabrice Bregier on Monday to celebrate "a major industrial deal," but withheld further details.

The red-carpet event mirrors a record 201-plane order for equivalent Boeing aircraft from Lion Air signed in front of visiting U.S. President Barack Obama in late 2011, sparking European claims of U.S. political pressure which Washington and Boeing denied.

The sources said the new Airbus A320-family order from Lion Air, founded by travel entrepreneur Rusdi Kirana, could top that number.

Kirana could not immediately be reached for comment.

Southeast Asia has emerged as one of the most fertile markets for popular medium-haul jets built by Airbus and Boeing, as rising incomes and a growing middle class boost air traffic.

Indonesia's 17,000 islands and relatively robust economy, well insulated from Europe's financial crisis, have made the world's largest archipelago a magnet for aircraft sellers.

Its domestic aviation market, serving the world's fourth largest population, is growing at 21 percent annually.

Reuters reported last week the two leading jet makers were scrapping over a potentially rapid new order from Lion Air.

French newspaper Les Echos reported in its early Monday edition that the order, for over 200 Airbus jets, would include many of the newest fuel-saving type of A320, worth $100 million each.

AIRASIA RIVALRY

While below a recent peak, airplane demand remains robust as airlines and lessors modernize fleets to drive down fuel costs, while emerging market growth continues almost unchecked.

However, there have been suggestions growth is cooling, prompting some carriers to buy aircraft only to lease them out.

In deals totalling $35 billion, Germany's Lufthansa last week ordered 102 Airbus and Boeing jets, Turkish Airlines picked up 82 from Airbus and Ireland's Ryanair is expected to sign for 170 Boeings.

The values represent official prices but in practice, strategic airlines win significant discounts for big orders.

The Lion Air order marks at least the third attempt by Airbus to woo Lion Air, long seen as a fortress for Boeing.

It is likely to throw the spotlight on an intense battle for market share between the largest plane makers.

It is also likely to add zest to a regional battle for supremacy between Lion Air and AirAsia, the low-cost carrier founded by Malaysian entrepreneur Tony Fernandes.

Lion Air is about to start up a domestic Malaysian rival to AirAsia, which has long been exclusively an Airbus operator. Some industry watchers have warned of a potential price war.

The airlines are respectively among the top buyers of Boeing and Airbus jets. Airlines rarely switch suppliers because of re-training costs and the burden of keeping extra spares, but the practice of "flipping" has grown as market share battles raged.

The Lion Air deal will be signed at the launch of France's 'Industry Week' as part of efforts to boost domestic manufacturing. Airbus aircraft are built mainly in the plane maker's founder nations France, Germany, Spain and Britain.

Boeing outsold Airbus in 2012 for the first time in six years and remains ahead this year, according to monthly data. - Reuters

http://biz.thestar.com.my/news/story.asp?file=/2013/3/18/business/20130318083130&sec=business

Edited March 18, 2013 by alberttky

[Naim 6]

With such a huge order, buyer should nego for some production to be done in ID/MY, like what China is doing.

[Syukri 0]

Maybe its not Mr Tony's best interest to develop Malaysian aviation industry in total... And same to Mr Rusdi.. Most of local production company is made over Government's deal..

[nrazmoor 0]

With such a huge order, buyer should nego for some production to be done in ID/MY, like what China is doing.

 

agree with you on this.., such a shame and a lost opportunity for both malaysia and indonesia...

[JuliusWong 0]

We take console that Malaysia firms are producing parts for Airbus family of aircraft. Indonesia is reviving its IPTN 250 turboprop aircraft.

[nrazmoor 0]

We take console that Malaysia firms are producing parts for Airbus family of aircraft. Indonesia is reviving its IPTN 250 turboprop aircraft.

 

i believe we deserved more than just producing some parts for airbus..

[BC Tam 2]

Deal is worth USD24B

60 'classic' A320

109 A320neo and

64 A321neo

Impressive numbers

[JuliusWong 0]

Lion Air now has 83 B737 in it's fleet, 330 B737 and 234 A320 on order for a total of 647 aircraft!! The aviation world gone mad!!

[BC Tam 2]

Lion Air now has 83 B737 in it's fleet, 330 B737 and 234 A320 on order for a total of 647 aircraft!! The aviation world gone mad!!

Add to that the few hundred or so Tan Sri has signed up for and it gets even more impressive

Admittedly quite a few of those incoming frames will replace old ones now flying, but still mind boggling

[JuliusWong 0]

Add to that the few hundred or so Tan Sri has signed up for and it gets even more impressive

Admittedly quite a few of those incoming frames will replace old ones now flying, but still mind boggling

Yes, indeed. Lion Air's current order is twice the number of Tan Sri TF's. No wonder TF is now back in concentrating on growing AirAsia Malaysia, Thai AirAsia and Indonesia AirAsia aggressively and turn around AirAsia Philippines and AirAsia Japan. The latter two are still not profitable.

[Mohd Suhaimi Fariz 2]

It's mind-boggling that some airlines can order 200 Airbus/Boeings with impunity while others have to scurry about finding funding to buy less than 10 planes...

[JuliusWong 0]

Just like Mydin.......The more you buy, the bigger the discount you will get. You also get more privilege and bargaining power with the manufacturer. Purchasing aircraft nowadays is just like shopping at mall.

[jit 0]

The orders will probably spread over 10 to 15 years.. starting in a few years time. That'll be about 10 to 20 narrowbody aircraft per year which is not so mind boggling. Thus deliveries in the second part will likely be replacement aircraft for its existing and those delivered in the first 5 years.

By making huge orders they not only get big discounts, they also get to lock in future purchases at today's prices.

As for financing, they only need to source for it when the aircraft are due to be delivered.

This approach is done by LCCs as their operation covers a range of up to 4 hours which can be served by a single aircraft type. And by doing so they keep their costs down.

Think Lion's order from Airbus instead of Boeing is to ensure that they are not completely dependent on one company which may prove to be a handicap in future negotiations.

[CH Teo 0]

With 100 737-900ER going for Malindo over next decade from now, getting this number of Airbus A320 family sounds not so mind boggling as half of the Boeing commitment will be going to Malaysia JV already...

[JuliusWong 0]

Lion Air's first A320 (literally).........

 

 

The biggest single order for A320 family! Seems like Mr. Rusdi has trumped Tan Sri TF as Airbus' most valuable customer. After ordering hundreds of Boeing 737-900ER, now Lion Air proof that they are the biggest airline in Indonesia in this period.

Edited March 19, 2013 by JuliusWong

[alberttky 0]

Interesting to see the CEO carrying a backpack...

[Christopher Lim 0]

at over 600 planes on order for Lion Air, thats comparable to the industry giants Delta, AA, Lufthansa, etc..

 

of course, Lion Air's is all narrowbodies, but still a feat given that the LCC leaders of today, eg. Ryanair, Southwest, dont even have as much on their order books.

 

Think this is all a reflection of the future of economic growth being in SEA. Will be interesting to see these two giants Lion Air and AirAsia X duke it out in the near future. May the best airline win.

 

Now waiting for AirAsia's PR response. Maybe topping up with another order of 300 airplanes from Bombardier C Seris? kekekkee....

 

 

[alberttky 0]

KUALA LUMPUR/PARIS: AirAsia boss Tony Fernandes questioned his rival's growth plans after Lion Air struck a US$24 billion Airbus order, while pledging to preserve his own ties with the European jetmaker.

As competition intensifies between Southeast Asia's largest budget carriers, Lion Air co-founder Rusdi Kirana shot back by targeting sharp growth in AirAsia's domestic Malaysian market.

In a realignment of industry loyalties, Indonesia's Lion Air loosened exclusive ties with Boeing this week to place a 234-plane order with Airbus, which is also sole supplier to AirAsia.

Asked if he was upset about the blockbuster deal between his top supplier and his closest rival, Fernandes said, "Why should I be? I think Lion has probably bitten off more than they can chew. We are focused on ourselves".

Lion Air co-founder Rusdi Kirana mocked any suggestion that the airline had over-extended itself.

"Is he an angel? Does he know the future?" Kirana said when asked about Fernandes's comments.

The two airline chiefs discussed the deal in separate interviews with Reuters.

Lion Air is preparing to launch services in Malaysia on Friday through a partially owned venture, Malindo Air, while AirAsia says it is filling planes successfully in Indonesia.

Kirana said Malindo hoped to operate 100 Boeing aircraft within 10 years.

The rapid rise of both airline groups has been channeled through exclusive partnerships with jetmakers Airbus and Boeing -- making the two airline bosses star players in a broader power struggle in the $100 billion jet industry.

Those battle lines were abruptly redrawn when Lion Air announced the Airbus order in Paris on Monday, doubling up on a similar order placed with Boeing just over a year ago.

AirAsia has taken delivery of over 100 Airbus A320 aircraft out of a total of 475 it has ordered.

Airlines can save money by running one type of fleet but can also obtain good pricing by forcing suppliers to compete.

SINGLE TYPE

Fernandes, who bought AirAsia together with its fleet of two Boeing 737s in 2001 and then built it into the largest operator of Airbus A320s, pledged to stick with the European planemaker.

Asked whether he might consider Boeing for future orders, he reiterated he wanted to stick with one type of aircraft. The Malaysian entrepreneur studied new jets from Canada's Bombardier before striking his most recent Airbus deal, however.

"I run a proper business not an emotional business," Fernandes told Reuters in an electronic interview.

"They have to sell planes. How can I stop them?," he said of Airbus's three-year courtship of Lion Air.

Low-cost airlines prefer operating one type of aircraft to reduce the cost of parts and separate crews. But the sheer size of some of the world's largest fleets has raised questions over whether one supplier can meet the needs of the largest airlines.

Air Berlin and Norwegian Air have a mixed portfolio of jets.

Bankers and lessors have expressed concerns that a series of record-breaking orders risks flooding Southeast Asia with too many narrowbody planes, despite projections of sharp growth.

"The world is big. There is a lot of space for everybody. We should accept that competition is normal," Kirana said.

Asia is expected to double its fleet in the next 20 years. - Reuters

http://biz.thestar.com.my/news/story.asp?file=/2013/3/22/business/20130322083909&sec=business

[Naim 6]

TF sounds sore. Real competition now. :-)

[V Wong 0]

Only now I could retrospectively understand why AK's share price dropped and pulling back the strict one hand luggage policy after Malindo came into the picture. Many people are still wondering if Malindo is for real, including me. On the other hand, if you travel frequently to Indonesia, you will realise how big Lion Air is. Its check in counters are always busy, carbon copy of AK LCCT counters

[TJANDY 0]

Interesting to see the CEO carrying a backpack...

Yes, indeed he is quite humble and it really makes me proud to think that we actually graduated from the same junior high school around 7 years apart. Just wondering if I can achieve a sort of success that Rusdi has in 7 years time.

[CH Teo 0]

Only now I could retrospectively understand why AK's share price dropped and pulling back the strict one hand luggage policy after Malindo came into the picture. Many people are still wondering if Malindo is for real, including me. On the other hand, if you travel frequently to Indonesia, you will realise how big Lion Air is. Its check in counters are always busy, carbon copy of AK LCCT counters

I would prefer Air Asia really controlling those passengers by blocking them to bring LOTS of hand carried items on board now in order to strictly adhere to the one hand luggage policy and offer the 1st 15 kg checked baggage for free or for RM 5 as seen during earlier years so that they can stay competitive as Malindo is in the Malaysian aviation picture now...

 

During my last trip with them on last July on a East Malaysia domestic flight, people still bringing "tons" of hand carry items and making the cabin feel like sardins despite the low seat pitch...Same situation when I observed inbound passengers from other flights while waiting for it, really a lot!

 

It would be GOOD if they really controlling the on board items!

Edited March 24, 2013 by CH Teo