Hard days for the airline companies aren’t over yet as the restrictions continue because of the pandemic. Letting their planes sleep also means losing without doing. Taking consideration of the situation, the European planemaker Airbus has reportedly agreed on Friday, September 18 on giving AirAsia a budget break by cutting prices and rescheduling hundreds of A320 family aircraft deliveries amounting to tens of billions of dollars.
Over the past decade, AirAsia and Airbus have worked together since 2006 by delivering the earliest and oldest A320s of the company. Then, comes the upgrade to an all-Airbus that gave reason for the older Boeing 737s to phase out.
In 2019, the Malaysia-based group has placed a significant order with Airbus and AirAsia also approved to upsize its future A320-family fleet, converting 253 orders for the A320neo to the larger A321neo version. In total, AirAsia has pending orders of 592 A320 Family aircraft including 353 A321neos.
Why Restructuring a major deal?
As the global health crisis hits hard, the majority of travel around the world are being shut down. Abruptly stopping the budget airline’s momentum and growth is the only option to save the company from massive bankruptcy.
AirAsia attested that the business is suffering because of travel restrictions imposed by its home countries.
It’s in this challenging climate that the low-cost carrier has sought to renegotiate its deal with Airbus. Reuters said this has successfully happened with an industry source saying on Friday that the deal has been reached to cut prices or reschedule delivery of undelivered aircraft.
In late April last year, AirAsia reviewed its outstanding orders and at the same time announced that it would stop taking Airbus jets deliveries. Months later, additional moves indicated the seriousness of the airline group’s situation. The AirAsia Group took a step to close its Japan subsidiary, restructured its AirAsia X subsidiary, and decreased its stake in its Indian subsidiary.
Speaking of the undelivered jets
AirAsia made clear that this revised deal does not involve the cancelation of undelivered jets but rather includes a new delivery schedule, price cuts, or other improvements in terms.
Sources also told that AirAsia has halted progress payments (incremental payments for undelivered aircraft) to Airbus that prompted the suspension of plans on producing aircraft on order pending the revised deal with the company.
According to ch-aviation.com, 354 Airbus jets remained undelivered. This divides into five A320neos and a whopping 349 A321neos. The airline had been steadily taking deliveries of these new jets in recent years, with the newest A321neos delivered to AirAsia (Malaysia) in November and December of 2019. Thai AirAsia also accepted two A321neos in the same year.
