AirAsia CEO says looking at Boeing 787 for AirAsia X fleet growth

[Chris Tan 0]

It may hwever introduce London flights just for the "prestige" of it as such long haul direct flights would not be really profitable for D7.

D7 is not MH. It is driven by profit, not prestige.

[KK Lee 5]

seriously doubt D7 will buy any Boeings and introduce a new type of aircraft into its fleet especially if the numbers are not much as it will cost them quite a lot to introduce a new type of aircraft from parts to crew training. And I do not thikbk D7 will fly to far away places with flight times of more than 12 hours. It may hwever introduce London flights just for the "prestige" of it as such long haul direct flights would not be really profitable for D7.

As a plc, the company must be seen to be growing else shares price will take a beating. Whether the company will be profitable in a few years time depending on economy, fuel price, CEO's fate, etc. If he is lucky, he will be hailed else will take the blame and fall, and life goes on with a new cycle.

Edited March 12, 2018 by KK Lee

[flee 5]

I think all this is a show to Airbus' new management. D7 are just reminding them that if they are not as nice as John and Fabrice, they do have other options, e.g. B78X

Edited March 12, 2018 by flee

[jahur 0]

Maybe airbus should offer D7 to take up Hawaians a330-800neo. Those planes are capable of europe just short of 50-60passengers in full density configuration compared to the a330-900neo but with lower fuel burn and weight cost and way more range. The 370 seating a330-900neo will confine them to at least one stop in between if they plan for long haul.

 

Doubt 787-10 will benefit. Even outsourcing crew for recurrent training to Thai or singapore creates backlog. E.g malindo now a lot of their fo's missed etops rating as they have clear them as quick as possible. To avoid this D7 will have to buy Sims or set up a third party centre in Malaysia which will cost a lot of money.

Edited March 12, 2018 by jahur

[flee 5]

Maybe airbus should offer D7 to take up Hawaians a330-800neo. Those planes are capable of europe just short of 50-60passengers in full density configuration compared to the a330-900neo but with lower fuel burn and weight cost and way more range. The 370 seating a330-900neo will confine them to at least one stop in between if they plan for long haul.

Unfortunately, D7 is not looking to increase its capacity - that is why they are taking newly leased aircraft in a single class configuration.

 

However, for long haul over 10 hours, the aircraft needs to be more comfortable. So premium flatbeds will sell without problems. If D7 takes the A339 with lie flats and 3-3-3 economy seats, they should operate KUL-ORY-LGW. Malaysia has fifth freedom rights - so dropping off and picking up pax in Paris should not be an issue. And the A339 can make it to Paris.

 

With new A339s with two class configuration being delivered, the old A333s can undergo a cabin refit - single class slimline seats at 31" pitch should yield approx 420 seats, shouldn't it? These can be used on 8 hour or lower flights to China and North Asia.

Doubt 787-10 will benefit. Even outsourcing crew for recurrent training to Thai or singapore creates backlog. E.g malindo now a lot of their fo's missed etops rating as they have clear them as quick as possible. To avoid this D7 will have to buy Sims or set up a third party centre in Malaysia which will cost a lot of money.

Yes, absolutely!

 

They have done the study on operating B77Ws before and came out negative. The B78X is a more expensive prospect. So the answer should be crystal clear!

[Jeremiah Wong 0]

Unfortunately, D7 is not looking to increase its capacity - that is why they are taking newly leased aircraft in a single class configuration.

 

However, for long haul over 10 hours, the aircraft needs to be more comfortable. So premium flatbeds will sell without problems. If D7 takes the A339 with lie flats and 3-3-3 economy seats, they should operate KUL-ORY-LGW. Malaysia has fifth freedom rights - so dropping off and picking up pax in Paris should not be an issue. And the A339 can make it to Paris.

 

With new A339s with two class configuration being delivered, the old A333s can undergo a cabin refit - single class slimline seats at 31" pitch should yield approx 420 seats, shouldn't it? These can be used on 8 hour or lower flights to China and North Asia.

Yes, absolutely!

 

They have done the study on operating B77Ws before and came out negative. The B78X is a more expensive prospect. So the answer should be crystal clear!

In order to gain access to more US cities, they need to seriously consider buying Boeing. Unless they have no plan for that at all. It’s political pressure.

 

Secondly, I’m sure Boeing is aware of those extra costs that will be incurred by operating a new type of aircraft. And it all depends on how willing Boeing is to offer a super good deal and package that will take care of D7’s training, maintenance and so on. If the package is attractive operationally and financially, the order might swing to Boeing.

 

As for Airbus, they’re having serious issue internally and incompetent product like 330neo. A330-800 simply doesn’t work for D7 to fly long haul. If it does they would’ve ordered A332 which also flies further.

[flee 5]

Unfortunately, D7 is not looking to increase its capacity - that is why they are taking newly leased aircraft in a single class configuration.

Sorry, what I meant to say was that D7 IS looking to increase its capacity....

As for Airbus, they’re having serious issue internally and incompetent product like 330neo. A330-800 simply doesn’t work for D7 to fly long haul. If it does they would’ve ordered A332 which also flies further.

The A330Neo is NOT an incompetent product. In many ways, it is competitive with the 787. It even uses updated versions of the 787's engines. IAG's CEO Willie Walsh also said that even the A330Ceo is economically competitive with the 787.

 

What this is all about is more the terms of business - Boeing is trying to KILL OFF the A330Neo programme to make space in the market for its MoM programme. The A330Neo does eat up some of the market that would otherwise go to the MoM. That was why it offered a huge, huge deal that Hawaiian cannot refuse. It is trying to do the same with Airasia X - but this is going to cost them a lot more because Airasia X is always committed to one aircraft type in its fleet to keep things simple and low cost. As such, Boeing has to offer a package for the WHOLE of D7's fleet and convince them the economics will be better. It is going to be a mega deal if they pull it off!

 

By the way, D7 is in no hurry to go back to EU or to go to the US. They have also said that any new US routes will still go thru Japan as the demand ex-KUL does not justify direct flights.

[Jeremiah Wong 0]

Sorry, what I meant to say was that D7 IS looking to increase its capacity....

The A330Neo is NOT an incompetent product. In many ways, it is competitive with the 787. It even uses updated versions of the 787's engines. IAG's CEO Willie Walsh also said that even the A330Ceo is economically competitive with the 787.

 

What this is all about is more the terms of business - Boeing is trying to KILL OFF the A330Neo programme to make space in the market for its MoM programme. The A330Neo does eat up some of the market that would otherwise go to the MoM. That was why it offered a huge, huge deal that Hawaiian cannot refuse. It is trying to do the same with Airasia X - but this is going to cost them a lot more because Airasia X is always committed to one aircraft type in its fleet to keep things simple and low cost. As such, Boeing has to offer a package for the WHOLE of D7's fleet and convince them the economics will be better. It is going to be a mega deal if they pull it off!

 

By the way, D7 is in no hurry to go back to EU or to go to the US. They have also said that any new US routes will still go thru Japan as the demand ex-KUL does not justify direct flights.

Flying thru Japan to US is also a service to US and political pressure applies. A330neo is clearly less appealing than 787 or else it won’t be overlooked by others. So far it’s only managed to attract LCC with exception of Delta and other odd order here and there. 200-ish order is not good enough to justify it’s a competent aircraft. Capable? Maybe, with payload restriction. Sophisticated? NO! Just like 748 to 380.

[flee 5]

Flying thru Japan to US is also a service to US and political pressure applies. A330neo is clearly less appealing than 787 or else it won’t be overlooked by others. So far it’s only managed to attract LCC with exception of Delta and other odd order here and there. 200-ish order is not good enough to justify it’s a competent aircraft. Capable? Maybe, with payload restriction. Sophisticated? NO! Just like 748 to 380.

Like I said, it is not so much a case of which aircraft is superior. It is a case of Boeing looking at the big picture in the market space for its proposed MoM aircraft. Also, as I have said, D7 is not really in a hurry to fly to more destinations in the US. And if Delta can use Airbus aircraft across the Pacific, why should D7 be asked to fly Boeings? There are plenty of other airlines flying trans Pac routes on Boeings.

 

Airlines don't really care what they fly as long as the cost is low and the yields are high. Only AVGeeks care about that!

Edited March 12, 2018 by flee

[flee 5]

Airasia X might be trying to use Boeing to get more discount for the A350.

 

Airbus might also not allow them to switch the A330Neo to the A350. So, they might threaten to walk away from Airbus .....

 

AirAsia X Could Swap 66-Jet Airbus A330Neo Order to A350s:

https://www.bloomberg.com/news/articles/2017-10-10/airasia-x-could-swap-entire-66-jet-airbus-a330neo-order-to-a350s

[Jeremiah Wong 0]

Airasia X might be trying to use Boeing to get more discount for the A350.

 

Airbus might also not allow them to switch the A330Neo to the A350. So, they might threaten to walk away from Airbus .....

 

AirAsia X Could Swap 66-Jet Airbus A330Neo Order to A350s:

https://www.bloomberg.com/news/articles/2017-10-10/airasia-x-could-swap-entire-66-jet-airbus-a330neo-order-to-a350s

Good lord that link is 6 months old. You kept saying they arent in a hurry. What if they decide to fly there nx year? Or two years later? Shouldnt they look for a more capable aircraft ie A350 or 787? Connecting London from Paris doesnt make much economic sense. The focus is not Paris to start with. Deltas transatlantic is considered as medium haul with flight time around 7-8 hours. So in order to return to Europe, they need either A350 or 787. A330neo is completely out.

[flee 5]

Good lord that link is 6 months old. You kept saying they arent in a hurry. What if they decide to fly there nx year? Or two years later? Shouldnt they look for a more capable aircraft ie A350 or 787? Connecting London from Paris doesnt make much economic sense. The focus is not Paris to start with. Deltas transatlantic is considered as medium haul with flight time around 7-8 hours. So in order to return to Europe, they need either A350 or 787. A330neo is completely out.

We should look at all the stories to piece together the information and to establish their trend of thought.

 

Basically, that story stated something really important - Airasia X will either take the A339 or A359 but not both. That implies that any order for B789 will be a huge one - at least the same size as their A339 order. And that makes it a difficult decision to take.

 

Also do note that both TF and Ben did not say anything about orders following media reports of their visit to Seattle.

 

In fact, the latest tweet by TF is about buying back a digital company that they had previously sold. Prior to that, TF was reported in the NST that Airbus has shared their A339 test data and assured them the A339 will be able to do KUL-London. Also note that Airbus states that a 251t MTOW version will be available - that means that it will do the route without any doubt.

 

Airasia's focus for the immediate future is China and North East Asia - they have just announced their suspension of Tehran and cutting Australian flights. So, they are putting most of their assets in East Asia and Japan. I think that they will only look at Europe once they have finalised their Asia plans.

 

Delta flies Airbus both on trans atlantic and trans pacific routes. The FAA did not force them to fly Boeings before granting them rights.

[Jeremiah Wong 0]

What about low resale value and difficulty in getting fincancer to finance the A339 order due to its lack of popularity among airlines? Hopefully it won’t end up like the A340 for its untimely demise.

[flee 5]

What about low resale value and difficulty in getting fincancer to finance the A339 order due to its lack of popularity among airlines? Hopefully it won’t end up like the A340 for its untimely demise.

Not sure about that - total lifecycle costs are uncertain. I think that nowadays, airlines no longer behave traditionally - just look at the A380 being retired after 10 years. The media is already reporting that many 777s will be coming off lease in the next few years, creating a huge glut of quite new 777s in the market. So, resale values of almost all aircraft are going to be low! The joker in the pack will be oil prices. If they rise above USD 100-120 per barrel, the A330 Neo will most probably die!

[Jeremiah Wong 0]

Not sure about that - total lifecycle costs are uncertain. I think that nowadays, airlines no longer behave traditionally - just look at the A380 being retired after 10 years. The media is already reporting that many 777s will be coming off lease in the next few years, creating a huge glut of quite new 777s in the market. So, resale values of almost all aircraft are going to be low! The joker in the pack will be oil prices. If they rise above USD 100-120 per barrel, the A330 Neo will most probably die!

Simply put therere some risks by investing in A339 in long run. Hope D7 realises this and not just falling for cheap entry price.

[BC Tam 2]

Simply put therere some risks by investing in A339 in long run. Hope D7 realises this and not just falling for cheap entry price.

I thought D7 is leasing in all their birds ?

That should by and large insulate them from so called life cycle risks no ?

[flee 5]

I thought D7 is leasing in all their birds ?

That should by and large insulate them from so called life cycle risks no ?

They have some under finance leases and some under operating leases. Some aircraft also come directly from lessors, AerCap.

 

Lower acquisition costs also mean lower finance costs as interest on a lower purchase price will be lower. However, engine maintenance costs should be quite close whether it is on the 787 or A339 - I think that they are using PBTH agreements for engines.

 

We won't have too long to wait before we will know... Farnborough Air Show is only four months away...