Sunday, July 19, 2009

AirAsia plans to sell three B737 aircraft

17 July 2009

PETALING JAYA: AirAsia Bhd plans to sell the three B737 aircraft it owns as part of a plan to have a fleet comprising only A320s, says group chief executive officer Datuk Seri Tony Fernandes.

The airline’s 16 B737s are used by its associate companies in Indonesia and Thailand for their operations. Of the 16, three are its own with no financial obligations while 13 are leased from GE Commercial Aviation Services (GECAS).

The plan is to replace the entire fleet of B737 with new A320-200s by selling three and returning the rest to GECAS.

However, the leased aircraft have different leasing tenures. If AirAsia can find a buyer for its aircraft and get “replacement” lessors for the 13, it would not have to worry about keeping the B737s for the full tenure.

If it decides to return the leased aircraft sooner, there may be a penalty but finding a new lessor would help. AirAsia is therefore working out arrangements to minimise its liability by helping to find a new lessor but this is subject to GECAS’ approval.

That is why AirAsia has started talks on both the sale and leasing arrangements for the B737s.

“We are currently in negotiations with several parties, both potential lessors and buyers,’’ said deputy CEO Datuk Kamarudin Meranun.

But as he pointed out: “AirAsia is not in a rush to sell the planes and certainly not at fire-sale prices. We will only dispose of them if the price is right.’’

Both Fernandes and Kamarudin said no timeline had been set for the aircraft disposal.

AirAsia ordered 175 aircraft with an option for 50 more from Airbus SAS in December 2007. Thus far, it has taken delivery of 61 A320-200 and will receive a further nine this year. It is slated to take delivery of 24 aircraft this year and another 24 in 2011.

Recently, the low-cost carrier decided to delay the delivery of eight aircraft scheduled for next year and negotiations are under way to delay a further eight for 2011.

That means it will only take delivery of 16 aircraft next year. This year it has received five of the 14 new aircraft, of which three will be used for the Malaysian operations, seven for Indonesia AirAsia and four for Thai AirAsia.

With the A320-200 fleet slowly but surely taking shape, the pressing question is whether AirAsia would be able to dispose of its B737s given the lack of demand for air travel and airlines are contracting capacity.

“There is a market for the aircraft but it depends on pricing, quality of aircraft and its maintenance record,’’ Kamarudin said.

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