A330-900neo: Lion Group leapfrogs AirAsia X as first Asian operator

Summary

• The Lion Group has committed to four A330-900neos for delivery in 2019 and will become the first A330neo operator in Asia.
• Lion Air will operate A330-900neos in single class configuration, while Thai Lion will operate A330-900neos in two class configuration.
• AirAsia X was an A330-900neo launch customer, initially ordering the aircraft in 2014 for delivery from 2018 but has delayed deliveries until at least 2020.
• AirAsia X has been trying to renegotiate its A330-900neo contract, potentially securing bigger discounts while switching to a higher gross weight variant.
• TAP Portugal will be the first A330-900neo operator while Azul and WOW air will be the first LCC operators with all three airlines slated to begin deliveries by the end of 2018.

AirAsia X is the largest (listed) A330-900neo customer

Airbus launched the A330neo programme at the 2014 Farnborough Airshow in Jul-2014. Initially the A330-900neo was slated to be delivered from late 2017 with the A330-800neo to follow in early 2018.

AirAsia X signed up as launch customer in Jul-2014 with an MOU for 50 aircraft. Airbus and AirAsia X announced in Dec-2014 a firm order for 55 A330-900neos and at the time stated deliveries would begin in 2018.

AirAsia X subsequently increased its A330-900neo commitments to 66 aircraft as it converted its last 11 A330-300ceo orders to A330-900neos. The AirAsia X Group currently operates 31 A330-300ceos consisting of 22 at its original subsidiary in Malaysia, seven at its Thai affiliate and two at its Indonesian affiliate. AirAsia X has the world's largest widebody LCC fleet; second largest is Norwegian which currently operates 29 787s.

AirAsia X is currently listed in the Airbus order book as the largest customer for the A330-900neo with 66 commitments. AirAsia X currently accounts for 28% of all A330-900neo orders, according to the CAPA Fleet Database.

However, AirAsia X over the last two years has been refusing to commit to A330neos and repeatedly postponing deliveries. AirAsia X could recommit during the 2018 Farnborough Airshow to acquiring the A330-900neo as part of a renegotiated deal with Airbus. Deliveries will begin in 2020 - at the earliest - as AirAsia X has turned to leasing second hand A330-300ceos to fill its capacity needs for 2018 and 2019.

The A330-900neo order book is not very strong (yet)

Airbus plans to deliver within the next few months the first A330-900neo to TAP Portugal. The A330-900neo flew for the first time in Oct-2017 and the aircraft (in TAP livery) has been on a demonstration tour the last several weeks in the lead up to Farnborough, where it is on the flying display.

TAP has the fourth largest commitment for the A330-900neo after AirAsia X, Iran Air and Delta Air Lines. However, the Iran Air order is in jeopardy after the US decided in May-2018 to revoke export licences for aircraft sold to Iran. (A second Iranian carrier, Zagros Airlines, also signed an MOU in 2017 for eight A330-900neos that is now unlikely to materialise.)

Iran Air, Zagros Airlines and AirAsia X are among 14 airlines with announced commitments for the A330-900neo. These 14 airlines have commitments for 177 aircraft, including commitments with leasing companies as well as orders placed directly with Airbus. There are 232 orders overall; the remaining 55 consist of 14 undisclosed orders and 41 orders from leasing companies that have not yet been assigned a customer, according to the CAPA Fleet Database.

Airlines with disclosed commitments for the A330-900neo: as of 16-Jul-2018

Airline/Airline Group	Number of aircraft on firm order
AirAsia X	66
Iran Air	28
Delta Air Lines	25
TAP Air Portugal	16
Garuda Indonesia	14
Zagros Airlines*	8
Azul	5
WOW air	4
Aircalin	2
Arkia Israeli Airlines	2
Air Mauritius	2
Air Senegal	2
Rwandair	2
Hi Fly	1

Notes: includes known commitments with leasing companies as well as orders placed directly with Airbus.
*Zargros commitment is an MOU that has not yet been converted to a firm order.
Source: CAPA Fleet Database

Airbus needs AirAsia X to recommit to the A330-900neo

Maintaining AirAsia X as an A330neo customer is crucial for Airbus as without AirAsia X, Iran Air and Zagros the A330neo order book would dwindle to only 130 aircraft.

AirAsia X clearly is aware that Airbus needs the AirAsia X order and a public recommitment would provide some much needed positive publicity for the A330neo programme.

The A330neo programme was also set back in Feb-2018 when Hawaiian Airlines cancelled its order for six A330-800neos and instead placed an order for 10 787-9s. Hawaiian was the only customer for the A330-800neo. Airbus is still planning to start the A330-800neo test flight programme later this year and is confident of securing new orders for the smaller variant, which is marketed as an A330-200ceo replacement.

AirAsia X has similarly talked about the possibility of acquiring 787s but these statements have been viewed generally as a bargaining ploy rather than serious consideration of switching to Boeing.

Air Asia X waits for increased MTOW A330-900neo

AirAsia X seems to be trying to negotiate a better price for the A330neo than it negotiated in 2014 and to avoid paying more for an increase in the maximum takeoff weight (MTOW).

The A330neo which AirAsia X purchased in 2014 is the original 242 tonne MTOW variant. While the aircraft that is about to enter service with TAP is 242 tonnes, Airbus has talked about a higher gross weight variant since launching the A330-900neo programme and has been offering since 2016 a 251 tonne variant.

AirAsia X prefers the 251 tonne variant, which is slated to enter service in 2020, as it should provide sufficient range to operate routes from Malaysia to Western Europe. The 242 tonne variant does not have sufficient range for Malaysia-Europe routes, making it impossible for AirAsia X to proceed with earlier aspirations for resuming services to Europe in 2018. As CAPA stated in a Nov-2017 analysis report: "AirAsia X at least for now is still only acquiring the original variant from 2018; waiting two years and potentially paying more for the new variant will likely make for some thorny negotiations in the coming months."

See related report: AirAsia X further delays London relaunch due to A330neo setback, adjusts fleet plan with more ceos

Azul and WOW will become the first LCC A330-900neo operators

AirAsia X is one of three LCCs currently listed by Airbus as having orders for A330neos, along with Iceland's WOW air and Brazil's Azul. WOW air has only four A330-900neos on order and Azul has five aircraft on order, according to the CAPA Fleet Database.

Azul and WOW are both now slated to begin A330-900neo deliveries in 4Q2018. WOW has set a 6-Dec-2018 launch date for services from Reykjavik to Delhi, a nearly 12hr route it cannot operate with its existing A330-300ceo fleet.

Lion Group emerges as first Asian A330neo customer

Although it has not yet been disclosed by Airbus as an A330-900neo customer, the Lion Group is now in line to become the third LCC operator after Azul and WOW. Lion Group is also in line to become the first Asian operator.

Thai Lion Air managing director Darsito Hendroseputro recently told CAPA that Thai Lion is slated to receive two A330-900neos in 2Q2019 as part of an initial four-aircraft commitment from the Lion Group. Indonesia-based Lion Air has been allocated the other two A330-900neos, which will also be delivered in 2019.

Lion is expected to acquire more A330-900neos for delivery in 2020 and 2021. The three year tentative fleet plan for Thai Lion includes five more A330neos in 2020 and five more A330neos in 2021.

Thai Lion has decided on a two class configuration for its future fleet of A330-900neos, whereas Lion Air has decided on an all-economy configuration. Lion Air currently operates three A330-300ceos in 440 seat all-economy configuration and Thai Lion operates three A330-300ceos in 392 seat two class configuration.

Thai Lion plans initially to use A330neos to expand in North Asia before launching long haul flights to Europe in 2020. Lion Air plans to use the A330-900neo to expand in the Indonesia-Saudi Arabia market, which it now serves with A330-300s and until recently 747-400s.

AirAsia X and other LCCs need to make a move

The Lion Group commitments may be among the 14 undisclosed A330-900neo orders or the 41 leasing company orders that have not yet been assigned an operator. Or it could be a new order, potentially from a conversion of orders the Lion Group has with Airbus for A320 family aircraft.

While the initial Lion Group commitment is small, it gives the A330-900neo programme a much needed shot in the arm. A potential recommitment from AirAsia X would give the programme even more momentum and help Airbus cement more orders.

Lion and Thai Lion have essentially taken early A330neo delivery slots that were originally for AirAsia X. AirAsia X and other LCCs in Asia Pacific will pay attention to the latest developments at Lion and may respond with their own A330neo commitments.