Malaysia's First Long-Haul Budget Airline to Buy 10 Airbus A330s

KUALA LUMPUR, Malaysia_AirAsia X, Malaysia's first long-haul budget carrier, signed a deal Monday to buy 10 Airbus A330s as the company pushed with plans to start flying later this year to Europe and China.

The agreement for the A330-300 wide-bodied aircraft includes a firm order for 10 jetliners and an option to buy five more at a later date, said the statement by Fly Asian Xpress, or FAX, the operator of AirAsia X.

The statement did not say how much the deal was worth. At list price the 15 aircraft cost around US$2.5 billion (€2.1 billion) although aircraft makers typically give discounts.

FAX Chief Executive Raja Mohamad Azmi, who signed the purchase deal, said the A330 would allow AirAsia X to operate cost effectively due to its operational and fuel efficiency capability.

FAX said the first 10 aircraft are scheduled to be delivered in the fourth quarter of 2008. Until then, the airline will operate with an interim fleet of leased aircraft, it said.

The statement ends speculation that the airline might put off its scheduled launch until next year when it is in possession of its own jetliners. Monday's statement made it clear that there would be no delay, saying FAX is in the final stages of firming up its interim fleet as it aims to start operations in late 2007.

The new airline is seen as a test of whether the highly successful low-cost airline model can be profitable on long-haul flights, which are dominated by full-service airlines.

To keep costs low, AirAsia X will fly to secondary airports in high-density cities across Europe and China and will use its aircraft for as long as 16 hours per day. It hopes to carry some 500,000 passengers in the first year.

"The acquisition of the A330 aircraft marks a very important milestone in our journey to become the world's first and most successful long haul lost cost airline," said Tony Fernandes, FAX director and the chief executive officer of AirAsia, FAX's successful parent company.

"We are very focused in realizing this vision and believe we will offer an overall customer value proposition that will revolutionize the aviation industry," he said in the statement.

Fernandes said FAX will "strive to make Malaysia the world's biggest low-cost hub," he said.

A330 seats a maximum of 335 passengers and has a range of up to 10,500 kilometers or 5,650 nautical miles and has flown over 5 million operational hours.

John Leahy, Airbus chief operating officer for customers, said the deal he signed with Raja Mohamad was another confirmation that the A330 is the right aircraft for medium to long-range operation in mid-market segments.