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Malaysia’s AirAsia Group restructures its huge Airbus plane order By Reuters



© Reuters. FILE PHOTO: A normal view of AirAsia headquarters, amid the coronavirus illness (COVID-19) outbreak in Sepang, Malaysia October 6, 2020. REUTERS/Lim Huey Teng/File Photograph

By Liz Lee and Jamie Freed

KUALA LUMPUR (Reuters) -Malaysia’s AirAsia Group Bhd mentioned it has reached a cope with Airbus SE (OTC:) to restructure an order for 362 narrowbody planes value tens of billions of {dollars}, together with switching 13 A320neos to the bigger A321neo mannequin.

Deliveries of the 362 A321neos are actually deliberate via 2035, the cash-strapped airline mentioned on Wednesday, with out offering particulars of the earlier timetable.

Business sources instructed Reuters final month that Airbus had agreed to reschedule deliveries https://www.reuters.com/enterprise/aerospace-defense/airasia-has-reached-deal-restructure-airbus-jet-order-sources-2021-09-17 and enhance phrases for its largest Asian buyer to salvage the dear contract.

AirAsia obtained its first A321neo in November 2019 and at the moment has 4 in service after halting deliveries in the course of the pandemic. Airbus bought six A321neos that had been constructed for AirAsia final yr, business sources have mentioned.

Airbus Chief Industrial Officer Christian Scherer mentioned in an announcement that the deal was an instance of how the planemaker had labored with prospects to adapt to the influence of the pandemic.

Different airways with massive airplane orders, most of that are in Asia, are additionally within the midst of restructuring their orders or are anticipated to press for reduction.

“It’s arduous to cancel except an airline goes the chapter or court-aided restructuring route,” mentioned Brendan Sobie, an unbiased aviation analyst. “The AirAsia order nonetheless is smart given the supply flexibility and assuming they’ve resolved the value escalation challenge.”

Planemakers sometimes put value escalation clauses into contracts that result in value rises when airways delay supply but in addition have the discretion to waive or not totally implement the value rises.

AirAsia’s auditors have, for greater than a yr, raised doubts about its potential to proceed as a going concern https://www.reuters.com/article/us-airasia-group-strategy-idUSKBN2490GN because of COVID-19’s influence on the journey business.

AirAsia Group President Bo Lingam mentioned the airline had totally reviewed its community and fleet technique because it prepares for journey to renew.

“Our enterprise mannequin is strong, and there’s a lot of pent-up demand,” he mentioned. “We’re assured that our airways will be capable of rebound and get better strongly as quickly as journey restrictions are lifted.”

AirAsia mentioned this week had obtained approval from Malaysia’s solely monetary assure issuer for a mortgage of as much as 500 million ringgit ($120 million) with an 80% authorities assure.

($1 = 4.1780 ringgit)

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