AirAsia: Plane delivery to be partly deferred
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AirAsia: Plane delivery to be partly deferred
Taken from the "The Star" newspaper..... wed 15th july
AirAsia to hold back on eight aircraft each in 2010 and 2011
KUALA LUMPUR: AirAsia Bhd plans to defer taking delivery of eight Airbus A320 aircraft for 2010 and may opt to do the same for another eight aircraft the following year, said its group chief executive officer Datuk Seri Tony Fernandes.
“We are negotiating with Airbus SAS to push the orders to the back end. Our focus next year is to consolidate our aircraft type to all A320s and return the 13 B737 that we have leased from GE Commercial Aviation Services (GECAS),” he told StarBiz in an interview.
Datuk Seri Tony Fernandes ... ‘we are negotiating with Airbus SAS to push the orders to the back end.’
AirAsia became the largest customer of the Airbus A320-200 in December 2007 after it placed a firm order for a total of 175 aircraft, with an option for 50 more. Deliveries are expected to run until 2014. For 2010 and 2011, the airline is slated to take delivery of 24 aircraft each year.
As at end-June, the budget airline had 61 aircraft of which 48 are for its Malaysian operations, and the rest for Thai AirAsia and Indonesia AirAsia.
Besides that, it also has a fleet of 16 B737, of which three are its own and 13 leased from GECAS.
With the deferment, AirAsia is expected to push most of it new aircraft to its associates in Indonesia and Thailand, leaving very few new aircraft for its Malaysian operations, thus limiting its growth potential going forward although the two units will be able to expand more aggressively.
“Deferring the delivery of these aircraft is an opportunity lost to AirAsia as it would mean forgoing an attractive 12-year aircraft financing package which is close to LIBOR (rates) negotiated just prior to the economic crisis. (But issues arising from) the uncertainty of the new LCCT to be completed by July 2011 far outweighs the opportunity lost in this attractive financing (package),’’ said Datuk Kamarudin Meranun, the deputy CEO of AirAsia.
Fernandes denied that the plan to defer aircraft deliveries had to do with raising funds for the purchase of the aircraft, saying “the funding for this and next year is in order.’’
In February this year, AirAsia mandated Barclays Capital, the investment banking division of Barclays PLC, to finance 15 of its new Airbus A320.
“We are in negotiations with the supplier for all aircraft to have minimal or zero cash outlay and that will not put a strain on our cash.
An AirAsia aircraft is being pulled at Kuala Lumpur International Airport’s low-cost carrier terminal in Sepang. With the deferment, AirAsia is expected to push most of its new aircraft to its associated in Indonesia and Thailand. - AP
“We are not delaying the deliveries because of cashflow, we need the planes for our operations but there is an infrastructure risk out there that we cannot afford to take,’’ Fernandes said.
All airlines had been hurt by the economic crisis, Fernandes pointed out, but “our cashflow is very healthy. In fact, we are working towards having RM1bil cashflow by the first quarter of 2011.’’
AirAsia had RM224mil cash and RM6.93bil debts in its books at the end of March 31, most of it for aircraft financing.
But for this year, Fernandes said “there will be no delays in taking the aircraft deliveries.’’
AirAsia has taken delivery of five of 14 aircraft scheduled for this year.
AirAsia has been expanding routes and frequencies when many airlines globally are cutting back, with the budget carrier aiming to expand to places like India, Middle East and North America.
“Expansion is necessary but we will never stretch ourselves. Imagine this, if we were to slow down we could have been crushed by our competitors from Singapore. We believe in growing but in a sensible manner,’’ Fernandes said.
AirAsia was only one of a handful of airlines to post a profit in the first quarter.
AirAsia’s earnings in its March quarter rose 26% to RM203.2mil from a year earlier due to higher passenger numbers from additional routes.
AirAsia to hold back on eight aircraft each in 2010 and 2011
KUALA LUMPUR: AirAsia Bhd plans to defer taking delivery of eight Airbus A320 aircraft for 2010 and may opt to do the same for another eight aircraft the following year, said its group chief executive officer Datuk Seri Tony Fernandes.
“We are negotiating with Airbus SAS to push the orders to the back end. Our focus next year is to consolidate our aircraft type to all A320s and return the 13 B737 that we have leased from GE Commercial Aviation Services (GECAS),” he told StarBiz in an interview.
Datuk Seri Tony Fernandes ... ‘we are negotiating with Airbus SAS to push the orders to the back end.’
AirAsia became the largest customer of the Airbus A320-200 in December 2007 after it placed a firm order for a total of 175 aircraft, with an option for 50 more. Deliveries are expected to run until 2014. For 2010 and 2011, the airline is slated to take delivery of 24 aircraft each year.
As at end-June, the budget airline had 61 aircraft of which 48 are for its Malaysian operations, and the rest for Thai AirAsia and Indonesia AirAsia.
Besides that, it also has a fleet of 16 B737, of which three are its own and 13 leased from GECAS.
With the deferment, AirAsia is expected to push most of it new aircraft to its associates in Indonesia and Thailand, leaving very few new aircraft for its Malaysian operations, thus limiting its growth potential going forward although the two units will be able to expand more aggressively.
“Deferring the delivery of these aircraft is an opportunity lost to AirAsia as it would mean forgoing an attractive 12-year aircraft financing package which is close to LIBOR (rates) negotiated just prior to the economic crisis. (But issues arising from) the uncertainty of the new LCCT to be completed by July 2011 far outweighs the opportunity lost in this attractive financing (package),’’ said Datuk Kamarudin Meranun, the deputy CEO of AirAsia.
Fernandes denied that the plan to defer aircraft deliveries had to do with raising funds for the purchase of the aircraft, saying “the funding for this and next year is in order.’’
In February this year, AirAsia mandated Barclays Capital, the investment banking division of Barclays PLC, to finance 15 of its new Airbus A320.
“We are in negotiations with the supplier for all aircraft to have minimal or zero cash outlay and that will not put a strain on our cash.
An AirAsia aircraft is being pulled at Kuala Lumpur International Airport’s low-cost carrier terminal in Sepang. With the deferment, AirAsia is expected to push most of its new aircraft to its associated in Indonesia and Thailand. - AP
“We are not delaying the deliveries because of cashflow, we need the planes for our operations but there is an infrastructure risk out there that we cannot afford to take,’’ Fernandes said.
All airlines had been hurt by the economic crisis, Fernandes pointed out, but “our cashflow is very healthy. In fact, we are working towards having RM1bil cashflow by the first quarter of 2011.’’
AirAsia had RM224mil cash and RM6.93bil debts in its books at the end of March 31, most of it for aircraft financing.
But for this year, Fernandes said “there will be no delays in taking the aircraft deliveries.’’
AirAsia has taken delivery of five of 14 aircraft scheduled for this year.
AirAsia has been expanding routes and frequencies when many airlines globally are cutting back, with the budget carrier aiming to expand to places like India, Middle East and North America.
“Expansion is necessary but we will never stretch ourselves. Imagine this, if we were to slow down we could have been crushed by our competitors from Singapore. We believe in growing but in a sensible manner,’’ Fernandes said.
AirAsia was only one of a handful of airlines to post a profit in the first quarter.
AirAsia’s earnings in its March quarter rose 26% to RM203.2mil from a year earlier due to higher passenger numbers from additional routes.
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I think alot of people knew it was going to happen sooner or later! They dont have the money plus its too expensive to finance the planes in this age of time. Tony has been conning everyone with his PR and propoganda. Biz world knows the amount of debt he's in, and what it means!
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The whole biz plan is a house of cards, leveraged to the max with an ever growing and unsustainable debt to equity ratio. The entire plan through greed is based on ever increasing pax numbers ie. That famous Tony quote "Growing the market" But, there comes a point of saturation brought by recession unforseen cost increases etc. The interconnectivity of cashflow funding based on predicted seat factor growth measured in ASK / RPPK is not a concrete fundamental. Therefore if the foundation is not secure the house of cards will topple. We are now seeing the end game. Tony has stretched the numbers further than most. Three to five years is usually the breaking point but Tony has shifted debt and secured loans that have reached such levels that his financiers have no choice but to continue pouring money into the blackhole as they see no other way to recover their principal outlay. Must be some really nervous bankers out there. But at the same time we are seeing vast amounts of cash evaporate because of the current economic climate. And as money in reality is not based on a tangible asset but rather is printed upon the sale of debt. The bankers will soon be forced to convert bad loans to something tangible. And unfortunatly I do not see anybody except a GLC in boleh land aquiring this debt. Good old Malaysian tax payer is going to foot the bill for this cowpat. Good one Tony, well done. Honesty and integrity you finest virtues. 
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no more fees
Capt Woo.. is correct... Tony must be on the ropes. he even removed his dubious ADMIN and fuel charges when you book with them
I dont know if he is short on planes or crew etc. But he doubling his crew (4man crew) on long hauls. KUL to Hangzhou..recently..so no nights stops.. just a quick crew change on the merry way..
This house of cards or shadows.. is going to be interesting in the next few months..
I cant wait for Tony rally around speachs again..... if he short on money cut the CAptains wages...
I dont know if he is short on planes or crew etc. But he doubling his crew (4man crew) on long hauls. KUL to Hangzhou..recently..so no nights stops.. just a quick crew change on the merry way..
This house of cards or shadows.. is going to be interesting in the next few months..
I cant wait for Tony rally around speachs again..... if he short on money cut the CAptains wages...
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So right
CW,
This is a house built on playing cards. SW and Ryan did it slow and steady and they blazed the way with no BS just hard dam work TF is truly full of himself.Even w/o his admin fees I found cheaper flights on SQ, Thai and others. What airline can add so many planes in such a short time. Operations and the commercial aspect are staggering no one has ever succeeded do you think his team is so good they can take this on?? I would like to see a real true no BS (pro-forma?) profit and cash flow statement - give me a break. He states his ASK are so low but how does he book his costs --- a mystery to all --- before i thought he was getting a great deal on fuel from Petronas but you would know better -- god bless us in this terrible time esp for airlines ----------------------
This is a house built on playing cards. SW and Ryan did it slow and steady and they blazed the way with no BS just hard dam work TF is truly full of himself.Even w/o his admin fees I found cheaper flights on SQ, Thai and others. What airline can add so many planes in such a short time. Operations and the commercial aspect are staggering no one has ever succeeded do you think his team is so good they can take this on?? I would like to see a real true no BS (pro-forma?) profit and cash flow statement - give me a break. He states his ASK are so low but how does he book his costs --- a mystery to all --- before i thought he was getting a great deal on fuel from Petronas but you would know better -- god bless us in this terrible time esp for airlines ----------------------
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Yes James.T,
I think the sad thing here is that TF was given a golden oppertunity to do this right. Build at a slow and steady pace. Remain private for 5+ years and in so doing build a strong foundation and in essence remain below the radar. There was no need to go public except to line their pockets. It sure looked to me like a smash and grab stratergy. I still wonder what became of the original Tune Air team that planned the aquisition from DRB Hicom. I think they were the real brains behind the initial operational success story. But, none are still there. And I believe none of them got what was promised to them money wise and thats why they left, and I hope to greener pastures. I believe that one of them is the driving force behind MAS's new route revenue stratergy and well to be frank MAS's prices are in many cases cheaper than AK's with the solid schedule and ancillery services associated with their service standards to boot. I just hope the Malaysian tax payer is spared from footing the bill if this house of cards comes down. I guess what really screwed up a lot of things here are TF's big mouth and ego. There is a lot to be said about a quiet achiever with honesty, integrity and a genuine heartfelt need to build in the interest of employees and customers. Sadly there doesn't seem to be many that have that vision.
I think the sad thing here is that TF was given a golden oppertunity to do this right. Build at a slow and steady pace. Remain private for 5+ years and in so doing build a strong foundation and in essence remain below the radar. There was no need to go public except to line their pockets. It sure looked to me like a smash and grab stratergy. I still wonder what became of the original Tune Air team that planned the aquisition from DRB Hicom. I think they were the real brains behind the initial operational success story. But, none are still there. And I believe none of them got what was promised to them money wise and thats why they left, and I hope to greener pastures. I believe that one of them is the driving force behind MAS's new route revenue stratergy and well to be frank MAS's prices are in many cases cheaper than AK's with the solid schedule and ancillery services associated with their service standards to boot. I just hope the Malaysian tax payer is spared from footing the bill if this house of cards comes down. I guess what really screwed up a lot of things here are TF's big mouth and ego. There is a lot to be said about a quiet achiever with honesty, integrity and a genuine heartfelt need to build in the interest of employees and customers. Sadly there doesn't seem to be many that have that vision.
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LCC
As an airline oldy but goody the key to an LCC model is simple but hard to do:
1) Single Fleet
2) Out source smartly
3) Strong smart sharp people (not dyed in wool legacy guy - can not adapt)
4) Top notch key operations no BS people.
5) Revenue Mngt that is sharp aggressive flexible and again no BS.
And a board who is conservative and liberal depending on the market.
How could any new airline order 200 planes in such a short time. What detailed business plan did they have?
Did they actaully think about the following issues - plus many more?
a) Asian market analysis
b) Population trends
c) Regualtory issues
d) Rights to fly into and over many many countries.
e) bi-lateral agreements.
f) Foreign ownership rights or lack of them in many countries
g) Staffing issue - getting the right people at right cost - still a very lean market for good people who actaully can do the job in key positions
1) Operations, COO, Chief Pilot, Airport Ops, Flight Ops, Ops Center, Engr, Quality, Program Mngt
2) Commercial,- Rev Mngt, Sales, Mkt, etc etc
3) Support HR, Finance, Legal
h) Aircraft and engine financing, leasing, fleet management
This is a tall order anywhere but especially Asia where this talent is hard to come by.
This is a tough killer business where millions and billions have been lost - but some seem to make money while the majorty fail and will fail - just a short reminder:
TWA, PanAm, Braniff, People. Laker, Piedmont, Vueling, Click, Indigo, Sahara, Ansett, Deccan, King Fisher, Go, I could go on all day..........................and this list will grow more - it would be larger if the government airlines Garuda, Thai, Vietnam, Qatar, Etihad etc where allowed to fail............
Enjoy - hope I can reti
re down the road................
1) Single Fleet
2) Out source smartly
3) Strong smart sharp people (not dyed in wool legacy guy - can not adapt)
4) Top notch key operations no BS people.
5) Revenue Mngt that is sharp aggressive flexible and again no BS.
And a board who is conservative and liberal depending on the market.
How could any new airline order 200 planes in such a short time. What detailed business plan did they have?
Did they actaully think about the following issues - plus many more?
a) Asian market analysis
b) Population trends
c) Regualtory issues
d) Rights to fly into and over many many countries.
e) bi-lateral agreements.
f) Foreign ownership rights or lack of them in many countries
g) Staffing issue - getting the right people at right cost - still a very lean market for good people who actaully can do the job in key positions
1) Operations, COO, Chief Pilot, Airport Ops, Flight Ops, Ops Center, Engr, Quality, Program Mngt
2) Commercial,- Rev Mngt, Sales, Mkt, etc etc
3) Support HR, Finance, Legal
h) Aircraft and engine financing, leasing, fleet management
This is a tall order anywhere but especially Asia where this talent is hard to come by.
This is a tough killer business where millions and billions have been lost - but some seem to make money while the majorty fail and will fail - just a short reminder:
TWA, PanAm, Braniff, People. Laker, Piedmont, Vueling, Click, Indigo, Sahara, Ansett, Deccan, King Fisher, Go, I could go on all day..........................and this list will grow more - it would be larger if the government airlines Garuda, Thai, Vietnam, Qatar, Etihad etc where allowed to fail............
Enjoy - hope I can reti
re down the road................
