Long-haul budget carrier AirAsia X has said that it will defer delivery of 78 Airbus A330neo aircraft as it makes changes to its fleet to reduce costs. It has said that the ongoing impact of coronavirus is forcing the airline to reconsider its plans as it continues to operate at a loss.
The Malaysian budget carrier is the latest airline to be impacted by the coronavirus outbreak. The airline is being forced to make reductions to its fleet while the outbreak continues to affect airlines’ operating profits. It has now announced it will delay taking delivery of 78 A330neo aircraft. There has been no comment on how long this delay may be.
In other fleet changes, the airline confirmed it was considering selling two Airbus A330-300s as well as returning a further five aircraft to lessors early. The sales would generate up to $100 million while new agreements with lessors could cut the airline’s lease rates by 30%. It also said it is working on some other short-term wet-lease arrangements.
The airline plans to use its A321s in place of the A330s on medium-haul routes. In a statement, AirAsia X CEO Benyamin Ismail said,
“We believe advanced aircraft technology has changed business dynamics as we can now fly narrowbody aircraft longer”.
Previous deals with Airbus
AirAsia X previously agreed on a deal with Airbus last August for the 78 A330 it now wants to delay. The airline also agreed to take 30 A321XLR narrowbodies. These two agreements replaced a previous agreement for 100 A330neos.
However, the airline is treading carefully around its deal with Airbus. Airbus has refused to comment on delivery schedules. But there is some history between the airline and the manufacturer which could affect dealings going forward.
AirAsia X’s sister airline is currently being investigated for corruption charges. The investigation comes as both the CEO and Chairman of AirAsia are suspected of having taken bribes from worth $50million for promising to order Airbus planes.
AirAsia X facing problems
But AirAsia X cannot afford to get caught up in a scandal. The airline posted a net loss of $22.6 million for the quarter ended 31st December. As a result, shares in the airline fell by 5%.
The airline is in a desperate bid to save money as it operates at a loss and has had to cancel 600 flights thought-out March. The carrier operates regular flights to mainland China which accounts for 30% of the airline’s total capacity. Demand for these flights is severely affected by the coronavirus and the airline just cannot afford to lose the regular income.
However, its operating loss in 2019 was actually an improvement on the numbers from 2018. The airline is going in the right direction, but coronavirus may have pushed the airline past the point of no return.
The airline no longer operates charter flights and has focused instead on launching new routes with high demand. It’s new Kuala Lumpur to Tokyo Narita flight is particularly popular. The measures announced this week will boost short-term cash flow to keep the airline in the sky as it tries to make a profit. But ongoing interference from the virus may mean it never gets the chance.