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(Bloomberg) — AirAsia X Bhd. is nearing an agreement to buy about 150 Airbus SE A220 aircraft, according to people familiar with the matter, in what would be the largest order for that type of jet.
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An agreement may be announced as soon as this week, the people said, asking not to be identified discussing confidential matters. Airbus declined to comment on any talks with customers, while AirAsia’s controlling shareholder, Capital A Bhd., didn’t immediately respond to requests for comment.
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The clinching of such an order would represent a victory for Airbus’s smallest commercial jet, which competes with planes made by Embraer SA. The A220, which is manufactured in Canada and the US, has faced supply-chain challenges that have slowed down production.
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As for AirAsia, co-founded by Malaysian businessman Tony Fernandes, the company is emerging as one of the region’s worst-hit airlines after the Iran war caused oil prices to soar. AirAsia is particularly vulnerable because of its lack of fuel hedges. Budget carriers also have fewer options than full-service airlines to cut costs.
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AirAsia shares have been the worst performers on the Bloomberg World Airlines index since the Middle East conflict began, with its stock losing nearly 40%.
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AirAsia operates an Airbus fleet with about 250 mostly single-aisle aircraft, and has a backlog of almost 400 orders comprised mostly of the top-selling A320 family of jets.
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Talks for the A220 deal have stretched as far back as early last year. The model, which can seat between 100 and 160 passengers, is smaller than what AirAsia usually flies but would enable it to operate from smaller airports and in markets that have less demand for traditional single-aisle jets.
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Fernandes is still committed to expansion plans after scaling back operations and restructuring its finances during the Covid pandemic. Beyond its regional Asian market, the airline still plans to start its Middle East hub in Bahrain as early as this year, which will act as a launching pad for transit flights into Europe.
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—With assistance from Leen Al-Rashdan.
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