Air Asia in talks for more A320's

[Keith T 2]

A rotting dead cat/dog by the roadside? Pretty close.

 

Gosh...

[Rozhan 0]

Rozhan, you a Kg Dong boy? I was last there hunting for some Rafflesia late last year. Trekked all the way past Mona Fandey's land. Read story HERE.

 

Btw, ahem, what's the sinister story about?

 

Also pls check your PM.

 

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Yes Naim. Kg Durian Sebatang, which is about 300m from Dong, before the bridge crossing the river. I used to work at SMK Dong for some years, and got to know more people from as far as Jeram Besu, and of course Lata Jarum in Ulu Dong. Through them, I got to visit more parts of the Raub district and know their places better. They are grown ups now.

 

Sinister story? Ahem, I'll get in touch with you soon.

[Naim 6]

Yes Naim. Kg Durian Sebatang, which is about 300m from Dong, before the bridge crossing the river. I used to work at SMK Dong for some years, and got to know more people from as far as Jeram Besu, and of course Lata Jarum in Ulu Dong. Through them, I got to visit more parts of the Raub district and know their places better. They are grown ups now.

 

Sinister story? Ahem, I'll get in touch with you soon.

 

I hear Mona Fandey's land near Lata Jarum is up for sale. Cheap-cheap!

 

Did you get my PM on the AK inflight mag?

 

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[BC Tam 2]

A rotting dead cat/dog by the roadside? Pretty close.

Funny though, those things are big tourism draws, both foreign and domestic. Could be something primal in all of us !

 

And there is this Rafflesia Centre near Tambunan here. One can only start to imagine the smell

[Naim 6]

Funny though, those things are big tourism draws, both foreign and domestic. Could be something primal in all of us !

 

And there is this Rafflesia Centre near Tambunan here. One can only start to imagine the smell

 

To appreciate the full aroma, you really have to shove your nose into the aperture/diaphragm, i.e. the hole in the middle of the flower. But be careful, the pongy chamber is also full of insects, esp. flies, which can easily get into your nostrils, mouth, eyes, ears, etc. So poke your face at your own risk!

 

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[Rozhan 0]

I hear Mona Fandey's land near Lata Jarum is up for sale. Cheap-cheap!

 

Did you get my PM on the AK inflight mag?

 

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Yes Naim. Just replied. I'm off to dinner for a while.

 

Mona's land for sale? Anyone wants? Creepy place, but lots of durian and rambutan in this part of Ulu Dong.

[Pieter C. 5]

and i affirm what i said earlier, there is no stopping them.

 

Back to the topic !!!

 

There is !!!

 

a- Expanding too fast and b- going International low-cost at the same time (which they're gonna do now)...

 

Re A: look at the passenger numbers above - they're more or less the same but more aircraft are being delivered to be filled...flew quite a few stretches last June on AK and the highest was around 70% (my KUL-PEN flight, actually had )

 

Re B: International LCC is a complete different market...if you don't have a 'big' supporter, like Jetstar (Qantas), it's very difficult to survive or make a profit...look at Laker, PeoplExpress Think, this is also the reason why Ryanair will stick to EU routes...

[Keith T 2]

Re A: look at the passenger numbers above - they're more or less the same but more aircraft are being delivered to be filled...flew quite a few stretches last June on AK and the highest was around 70% (my KUL-PEN flight, actually had )

 

Noticed that too - both my flights in JUL (JHB-KUL-JHB) were 60-70% filled at best. While 2 flights aren;t a great statistical measure, my observation does concur with Pieter's and some of the others here.

 

LCCT was rather busy though, but then again I figured that I was there during peak hour.

Edited August 26, 2007 by Keith T

[Isaac 0]

Re A: look at the passenger numbers above - they're more or less the same but more aircraft are being delivered to be filled...flew quite a few stretches last June on AK and the highest was around 70% (my KUL-PEN flight, actually had )

Indeed. My flight with AK from KUL to JHB was barely filled. Back then AK had 2x daily flights between KUL/JHB and it's now been reduced to only 1x daily. A friend of mine who flew AK between KUL/PEN two weeks before also said the same thing. MAS still have like 10+ daily flights between KUL/PEN now while AK still stuck at 4x daily. AK also don't seem to fare well for their intra-East Malaysia flights. AK Flights between BKI/SDK were mostly less than 1/4 full on the 733. I guess the real money maker domestic routes for AK are the flights between the Peninsular Malaysia and East Malaysia.

Edited August 26, 2007 by Isaac

[Keith T 2]

MAS still have like 10+ daily flights between KUL/PEN now while AK still stuck at 4x daily.

 

That might be because KUL/PEN is a major feeder route for MH's international flights, whereas AK focuses on point to point operations.

[Sandeep G 1]

hmmm interesting stuff here.

 

Just wanted to add some of my own theory. Although AK may have 150+ A320s on order - it does not mean that they will be operating ALL these aircraft at any one time... there is a concept of lifecycle management that AirAsia will most probably apply in their asset management - that being that the A320s will most probably be fully utilised until a major D check - and with the number of cycles being flown by the AK 320 fleet, that would probably be within 5 - 6 years. The heavy maintenance D check is very expensive for the airline and as you can probably tell, all the aircraft would be heading into D checks at roughly the same time - so soon enough, every month for a couple of months these birds will be out of service and not making any money - hence the new orders.. when these aircraft are getting ready to go into heavy maintenance checks, the airline will probably seek new buyers or lessors for the aircraft and pass the cost onto them in some way or another - it is similar to what SIA practices. At the same time, with the new orders, the fleet will be replenished with fresh birds that have a warranty and are good to go for the next 5-6 years. Perhaps AirAsia will only look at having a Malaysian based fleet of up to 50-60 birds at any one time which makes a lot of sense. Furthermore, the A320s (as has been mentioned here already) are for other subsidary companies such as ThaiAirAsia and IndonesiaAirAsia.

 

By maintaining a young fleet in the industry, AirAsia partially insures itself against aircraft associated down-time - by the notion that newer aircraft are covered by a generous warranty period by the manufacturer and 'usually' will have less technical downtime. Furthermore, the allocation of aircraft construction slots at Airbus' facilities are tight, and ordering in advance guarantees AirAsia of aircraft when they predict they may need them. If they don't, they may have clauses in their contract to sell off the rights to other airlines for a premium and recover some of their costs associated with the order.

 

The airline business is not simple black and white (and in some cases red). There are plenty of intricacies that we oversee. Let's not look at AirAsia's order for 200 aircraft as "kiasu" or "menancing" or even perhaps "over-expansion"... I think we could actually take the opportunity to further understand the industry by asking the questions, "why are they ordering these other aircraft? what's the motive? where will they put them? what will happen to the others?" In asking questions, you're guaranteed to learn more and probably will have a greater knowledge of the industry.

 

Great thread anyway!

 

Cheers.

[Naim 6]

...could actually take the opportunity to further understand the industry by asking the questions, "why are they ordering these other aircraft? what's the motive? where will they put them? what will happen to the others?" In asking questions, you're guaranteed to learn more and probably will have a greater knowledge of the industry.

...

 

Good input, Sandeep. Being mischievous, I have one simple motive to buy more planes - someone wants to make a quick buck on commissions. Remember, these are cunning businessman we're talking about. They're no aviation evangelists.

 

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[Sandeep G 1]

Hi Naim, thanks for the reply.

 

Yes, under the table commissions are possibly a feature of must lucarative business contracts, I cannot proclaim whether they are or aren't a feature of the aviation industry. However, at the end of the day, it is AirAsia's executive board who are responsible for delivering a sustainable business plan that is to be adhered by the employees of the company in order to achieve profitability and hence return to shareholders.

 

$$$ is the key driver in any business and at the moment, Airbus is itself in quite a fix with regards to the Airbus project - the amount of discounts being thrown around on the A320/A330 family is stupendous.... so it could mean that there is plenty of money around for commissions or little room at all! But clinching this kind of deal, someone somewhere will be getting sales commissions - even if at the end of the day it's the Airbus salesman.

 

 

[Azmir I. 1]

Well answered sandeep.great ,keep it up.

[Alex Oh 0]

One of the best rationale theory I've ever heard sandeep. One hack of a mind you have.

=D

[Naim 6]

Hi Naim, thanks for the reply.

...

 

But still Mr Sandeep sir, you have not addressed investors' concern vis-a-vis AK's business direction. Even in today's The Edge Daily, we get this:

 

‘Outperform’ on MAS, target price at RM8.40

 

CIMB Research has an “outperform” recommendation on Malaysian Airline System Bhd (MAS) with a target price of RM8.40, based on an unchanged forward price-to-earnings (PE) of 12 times.

 

...

Aseambankers Research said although it was not reviewing its earnings forecasts at this point, it expected potential upside to its numbers assuming the competitive landscape remained unchanged.

...

“We continue to prefer MAS over AirAsia Bhd for its less demanding valuations and more visible earnings growth,” it said.

 

http://www.theedgedaily.com/cms/content.js...8c6f30-13fc1504

 

Well-said, Aseambankers.

 

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[Louis L. 2]

The airline business is not simple black and white (and in some cases red). There are plenty of intricacies that we oversee. Let's not look at AirAsia's order for 200 aircraft as "kiasu" or "menancing" or even perhaps "over-expansion"... I think we could actually take the opportunity to further understand the industry by asking the questions, "why are they ordering these other aircraft? what's the motive? where will they put them? what will happen to the others?" In asking questions, you're guaranteed to learn more and probably will have a greater knowledge of the industry.

 

....nicely said sandeep.....ur theory seems clicks with me...but as far as we concern..or to say within my knowledge...we also do not know y there r expanding so rapidly...maybe ur theory is true,sandeep ..but..for the time being...let time do the experimental procedure and we just wait for the results...

 

in my opinion,ak's management seems dun look like so ego or to say stupid to announce it plan to expand it's fleet just for the sake of glory or fame...i do believe that they have their have their plan in their mind ....

[Sandeep G 1]

But still Mr Sandeep sir, you have not addressed investors' concern vis-a-vis AK's business direction. Even in today's The Edge Daily, we get this:

Well-said, Aseambankers.

 

+++

 

True, but the problem that Aseambankers face in there evaluations of MAS and AirAsia is that even despite both airlines being in the same industry, they are operating under completely different models.

 

In the case of MAS, it operates on a more traditional platform and thus, performance evaluations and projections based on many historical case studies and industry trends may be applied to any evaluation of MAS stock.

 

AirAsia on the other hand, uses a less conventional and more modern business operating model that quite frankly has nothing to compare with in terms of evaluation.. despite carriers of a similar nature in Europe and the USA, the operating environment in Asia is significantly different. For example, bureaucratic red tape and regulatory constraints are more prominent in Asia. The protection of legacy national carriers is also more prolifent in Asian nations - Malaysia is a commonly used example in many studies concerning government intervention in the airline industry. This is a key concern that hampers evaluations of AirAsia.. without these restrictions, what AirAsia promises to do, it will do.. At the moment, AirAsia does more "dream" talking and is working hard in the background trying to change the industry landscape through promoting deregulation to a certain degree and broadening competition. Flights to Singapore are a perfect example.

 

This is a major reason why AirAsia does not receive spectacular Buy reccomendations on the stockmarket. It's PE isn't too bad, but of course, it may have lower margins than MAS (Speculative, I can't deny or confirm, haven't seen any figures).

 

AirAsia stocks have never really performed well on "Announcement" (concerning operations) days (apart from earnings reports and the release of positive financial data). However, on days that business plans are implemented, or contracts are signed - you will see good performance from AirAsia. Recently, Richard Bransons stake in FAX prompted some interest in AirAsia Bhd. Of course not too great, as his interest is in a private company that is seperate from AirAsia Bhd. But ultimately, investors know that the two entities are hand in hand, and the market responed accordingly that day.

 

When AirAsiaX finally takes off, you will see some interest again. The market is lagging in that it is still not sure with AirAsia - and also, analysts are expressing caution on AirAsia stocks and even MAS following the Transmile scandal. Financial accounting will continue to be an area of close scrutiny by the market in AirAsia - people are still not comfortable with where AirAsia's profits are coming from - this stems purely from a lack of understanding of the business operating model (LCC) that AirAsia employs within the Asian region.

 

At the end of the day, we must consider AirAsia a pioneering company in the low cost segment of the airline industy for the Asian region. It will ultimately be a case book study I'm sure, especially if it continues to excel and succeed. In today's volatile market scenario also, it is not supriseing to see Aseambankers place such a reccomendation on traditional business models (MAS) against unproven ones (AirAsia).

 

These are just my thoughts and of course in now way gospel. I'm simply saying what I feel could be the case, and will research more later.

 

Cheers.

[Naim 6]

True, but the problem that Aseambankers face in there evaluations of MAS and AirAsia is that even despite both airlines being in the same industry, they are operating under completely different models.

 

...

Cheers.

 

This is akin to the 'haphazard valuation' of dotcom companies in the late 90s before the bubble burst. In a sense bitten investors are now wary of any biz model perceived as 'risky', but such is the nature of investment. Risk-taking mavericks like Branson thrive on something like this, but for normal institutional and retail investors, this is not really their cup of tea.

 

So, as I said, 5 yrs is not a long period in business. I am a risk-taker myself, my business is risk-taking, and frankly I'd like to invest in AK (my family use AK almost 2x a month on average), but I have to be objective as well, and I do not like hypes, especially those used to jack up valuation for the promoters to make a quick buck.

 

Thanks for the heads-up, Sandeep.

 

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[DavidC 0]

Have flown AK (KUL/PEN/KUL) many times is the past 3 months and i must say they have managed to improve their arrival punctuality - quite often earlier than scheduled time. Before that was like you know departure is gonna be late and of course arrival. Love those 320s... much better than 737s.

 

DavidC

[Sri Ramani K. 0]

just a side note and to be off topic, AirAsia signed to buy another 25 more a320s making it a firm 175 orders.

and just now, tony announced a 2 month bonus for all staffs and an additional allowance for those who have contributed a lot towards the company.

 

loads of good stuff happening for them right now.

[Walter Sim 1]

WOW! 2 Months bonus, haven't seen that happening for a while now..

 

Congratulations to everyone from AirAsia, they certainly deserve it

[Naim 6]

Malaysia's AirAsia to order 25 new Airbus planes

31/8/07

 

KUALA LUMPUR (AFP) — Southeast Asia's largest low-cost carrier AirAsia will order 25 Airbus A320s to meet rising passenger demand, officials said Friday after announcing plans to launch a new budget airline in Vietnam.

 

"We will need another 25 A320s, we will make an announcement in the next two weeks to increase our A320 fleet," Chief Executive Tony Fernandes told AFP.

 

Officials estimate the purchase cost to be around 1.6 billion dollars based on the list price of the model.

 

The Malaysian budget carrier currently has a fleet of 50 aircraft, but has 150 Airbus A320-200s on order, which it said was needed to handle rising passenger demand.

 

Tom Ballantyne, chief correspondent with Orient Aviation magazine, said the purchase was part of AirAsia's plans to have a network covering the whole Asia-Pacific region.

 

"The growth in the region is incredible so they are basically trying to keep up with it," he told AFP by telephone from Australia.

 

AirAsia also said Friday that it would team up with the state-owned Vietnam Shipbuilding Industry Corporation (Vinashin) to form Vina AirAsia -- Vietnam's first budget carrier -- in a 30-million-dollar deal.

 

"We have signed a Memorandum of Understanding with Vinashin," Fernandes said.

 

"Vietnam, with a pro-business leadership and a 84-million population, is a fertile place for AirAsia to expand its business. We are seeing a tourism boom and we want to be part of it," he added.

 

A contract will be formally signed on September 20, Fernandes told AFP, and Vina AirAsia planned to begin flying in July 2008, with possible routes to southern China from its hub in Hanoi.

 

Pham Thanh Binh, chairman and chief executive officer of Vinashin, said that the company was excited to be forming a partnership with AirAsia.

 

Vinashin's business activities include ship building, finance, property development and banking.

 

It will be entering the aviation industry for the first time, holding a majority stake in the venture, which will have an initial share capital of 30 million dollars.

 

"Aside from Vietnam, we are also planning two more joint ventures in the region," Fernandes said earlier in the New Straits Times newspaper, but gave no further details.

 

AirAsia's has similar partnership agreements with Thailand and Indonesia -- alliances which Fernandes said have yet to bring in profits.

 

"But we are very positive. We are in for the long haul," he told AFP.

 

AirAsia, the single largest buyer of the A320-200 in the Asia-Pacific region, will formally announce the purchase of the 25 new Airbus A320s soon.

 

The six-year-old firm currently has 15 A320s and 35 Boeing 737-300s, but wants to reduce costs by having its fleet made up of just a single type of jet and plans to replace the single-aisle, 148-seat Boeings with the A320s.

 

Some of the 150 jets currently on order are due to start flying in 2009.

 

Ballantyne said that any new orders would be linked to the unveiling in January of AirAsia X, a long-haul arm of the budget airline which Richard Branson's Virgin Group will take a 20 percent stake in.

 

"They are building up a network ... that covers the whole Asia-Pacific region which would then interlink with the network of AirAsia X which will be flying to Europe, Australia, Africa and other places," he said.

 

For Airbus, Ballantyne said the order confirmed their place as a provider of A320s for the budget airline market.

 

AirAsia, which announced new routes from Thailand and Malaysia to Hong Kong last week, on Thursday reported a 41.5 percent rise in net profit in the fourth quarter to 185.05 million ringgit (53 million dollars).

 

They said the profit followed a 45 percent increase in passengers.

 

http://afp.google.com/article/ALeqM5gOvhcF...JQQ4GQ392CHilkQ

[Sri Ramani K. 0]

as mentioned in the other thread, the order has been confirmed but haven't been made public.

[Andy 1]

as mentioned in the other thread, the order has been confirmed but haven't been made public.

 

 

 

 

 

yea i think the A320 is a good deal.. maintenance wise it is easier compare to 737-300..