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AirAsia defers delivery of seven A320s to 2015

5-Aug-2010 9:08 AM

AirAsia announced (04-Aug-2010) it has signed an amendment agreement with Airbus for the revision of the delivery dates of seven A320 aircraft originally scheduled for delivery in 2011 to the year 2015. With the deferment, the delivery of 15 aircraft in 2011 shall be reduced to eight aircraft. The number of deliveries in 2015 will also be increased from two aircraft to nine aircraft. The rationale for the deferral of the 2011 aircraft is similar to its rationale for the deferral of the 2010 Aircraft in Aug-2009, in that AirAsia foresees infrastructural constraints with the current airport facilities at Kuala Lumpur International Airport. Until the new LCCT is constructed, the present 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. The LCCT is expected to be completed by Mar-2012 (Malaysia Business Times, 04-Aug-2010). The rationale to further scale down on the delivery of aircraft in 2011 is to enable AirAsia to optimise its fleet and avoid the costs associated with leaving idle or underutilised aircraft due to infrastructural limitations – avoiding having to incur depreciation, interest expense and other costs without earning revenue. The Amendment Agreement is not expected to have any material impact on the financial position of AirAsia for this current financial year but may to a limited extend impinge on the earnings growth in the short term period. Under a Purchase Agreement and a number of amendment agreements entered into between Airbus and AirAsia, AirAsia has agreed to a firm order of 175 A320 aircraft, which schedule of delivery runs from Dec-2005 to Oct-2014. [more]