AirAsia Berhard bought 200 LEAP-1A aircraft engines from CFM International with a value of US$23.1 billion - Photo by AirAsia Bhd

JAKARTA (TheInsiderStories) – The world’s low-cost carrier, AirAsia Berhard bought 200 LEAP-1A aircraft engines from CFM International with a value of US$23.1 billion. The signing of the contract was signed on the sidelines of the 2019 International Paris Air Show at La Bourget, Paris, France, on June 18.

Holding company of Indonesia’s PT AirAsia Indonesia Tbk (IDX: CMPP) also announced on June 19 will be upsizing its future Airbus single-aisle fleet by converting 253 orders for the A320Neo for the larger A321Neo version.

The Executive Chairman Datuk Kamarudin Meranun the upsizing will enable AirAsia to offer higher capacity in response to ongoing strong demand across its network. In total, he added, AirAsia has placed orders for 592 of the A320 family aircraft.

“We have spent some years reviewing what the future of our operations will look like and we are proud to become the world’s largest customer for the A321neo,” he said in a statement after signing the agreement with CFM International.

Following the upsizing, AirAsia will become the world’ largest customer for the A321Neo with 353 aircraft on order. The aviation firm currently has 230 units of the A320 family aircraft in service, flying out of its hubs in Malaysia, Indonesia, Thailand, the Philippines, India, and Japan.

The A321Neo would have a maximum capacity of 244 seats compared to AirAsia’ existing A320 (180 seats) or A320Neo (186 seats) fleets.

In a separate statement, CFM International said under the agreement, CFM Services guarantees maintenance costs for the AirAsia’ LEAP-1A engines on a dollar per engine flight hour basis. 

The airline from the neighboring country is one of LEAP’ early customers who has ordered 400 LEAP-1A engines – the number of which was recorded at its time – to run the A320Neo aircraft since June 2011. The first A320Neo shipment that used a LEAP engine in 2016. Currently there are 39 AirAsia aircraft that use the fuel efficient engine.

Previously, its unit AirAsia Indonesia intend to acquire shares of domestic airline PT Citilink Indonesia from the ownership of PT Garuda Indonesia Tbk (IDX: GIAA), and was not interested in establishing operational cooperation, said the senior officer last week.

Although it has not officially announced how many shares are planned, AirAsia has shown its commitment to establish cooperation in the field of Indonesian aviation services by acquiring the Low Cost Carrier (LCC) airline shares.

AirAsia claimed that apart from being both the LCC airline, the two airlines have similarities, including the companyis strong at the international level, while Citilink have power in the domestic market.

In addition, the two airlines also use the same type of A320, as well as the same pilot, cabin crew rating and parts and maintenance. Previously, Garuda Indonesia offered operational cooperation to AirAsia and not to acquire its subsidiary so that both parties were equally profitable.

But, AirAsia management refused to cooperate with the “operational cooperation” scheme, as carried out between Garuda Indonesia and the Sriwijaya Group (Sriwijaya Air and NAM Air) and was more interested in owning a half shares of the State-Owned Enterprises (SOEs) company.

However, Garuda Indonesia is still opening the door of partnership if both parties reach an agreement while waiting for an official proposal from AirAsia

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

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