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Airbus has won an order for 150 new A220-300 aircraft in a “$19bn deal” with budget carrier Air Asia, that is a major boost for the planemaker’s Canadian manufacturing base.
“This is a $19bn deal which can grow to $38bn,” said Tony Fernandes, the founder and CEO of AirAsia, a Malaysian low-cost airline based near Kuala Lumpur.
Under the terms of the deal AirAsia will buy 150 A220-300 jets, which seat up to 160 passengers. Fernandes added that if Airbus were to decide to launch a larger or stretch version of the A220, the A220-500, which has 185 seats, he would buy another 150 jets.
“That’s the aircraft we really want,” he said at the announcement at Airbus’s facility in Mirabel, Quebec, where the A220-300 planes are assembled. “If they build that aircraft, AirAsia will buy another 150 of these aircraft as well.”
Canadian Prime Minister Mark Carney said the deal, which is Canada’s biggest ever commercial aircraft order, shows Ottawa’s efforts to generate new global trade deals in an attempt to reduce its reliance on the US are paying off.
“You are choosing the best at exactly the right time,” Carney told Fernandes.
“I generally don’t like bankers but (Carney) he’s the first banker I like, especially from Goldman Sachs,” Fernandes joked, after praising the Canadian leader’s speech at Davos calling for an alliance of middle powers. alliance.
“This deal brings two great middle powers together, ASEAN (Asia’s regional trade bloc) and Canada,” he added.
Airbus assembles the A220 at two sites: Mirabel in the Canadian province of Quebec and Mobile, Alabama in the US.
The world’s largest planemaker has been trying to increase production of the A220 in order to break even on the lossmaking programme which it took over from Canada’s Bombardier in 2018.
Airbus said last month it aimed to assemble 12 A220-300s a month in 2026 and was targeting a rate of 13 aircraft a month in 2028.
The ramp-up has been made more challenging in part because it has had to integrate assets from Spirit AeroSystems, including a facility at Belfast in Northern Ireland which makes the wings for the A220 jets.
Former Air Canada executive John Gradek, now a lecturer in aviation management at McGill University, said the deal had been in the works for more than a year, with AirAsia getting significant price discounts.
“It’s a great airplane, but the discounts mean Airbus have to get the production up,” he said, adding: “the operative word is being built quickly, not at seven a month.”
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