AirAsia signs major deal, orders 150 Canada-made Airbus A220 jets

AirAsia X Bhd will buy 150 Canadian-made Airbus SE A220 aircraft, a multibillion-dollar sale for the European planemaker that will provide a boost for its manufacturing site in Quebec.

Tony Fernandes, co-founder of the Southeast Asian budget carrier, signed the agreement at the Airbus Canada factory in Mirabel, Quebec, where the plane is made. The announcement confirms an earlier Bloomberg News report.

The AirAsia deal is for A220-300s, which seat up to 160 passengers. Airlines typically receive substantial discounts for large transactions. The deal also includes an option for 150 additional aircraft of a higher-capacity variant of over 180 seats, the A220-500, which has yet to enter production, Fernandes said in an interview.


Airbus has to “decide by the fourth quarter whether they’re doing it,” he said, adding that the company has said a first delivery could happen in 2032. “I sense the Canadian government may assist them. I’m pushing for it to be ready in 2031.”

The deal is potentially worth about $6.8 billion, based on Ishka data that values new A220-300s jets at $45 million apiece. Airbus stopped publishing list prices for aircraft in 2021.

Depositary receipts of Airbus were up more than 6 per cent as of 3:30 p.m. in New York trading.

Prime Minister Mark Carney billed it as the largest order of a Canadian-designed and produced aircraft in history. He and Lars Wagner, Airbus’ commercial aircraft CEO, were among the high-profile delegates to join the public announcement for an order that’s seen as a big lift for a flagging jet program.

The A220 has faced production challenges since its inception, when it was known as the Bombardier Inc. CSeries before being rescued by Airbus, with financial help from the Quebec government.

Of the roughly 1,000 A220 jets ordered to date, Airbus still had another 458 planes to deliver as of April 9. AirAsia’s order will increase the backlog by about 33 per cent.

Airbus beat Embraer SA for the AirAsia contract, winning a large-volume deal after losing to the Brazilian planemaker on orders in the past year made by Finnair, US-based Avelo Airlines and SAS Scandinavian Airlines.

“Embraer did a fantastic job, and it was very tough choosing,” said Fernandes, who wore a Montreal Canadiens hockey jersey while taking questions from reporters. He said he expects the first plane from the new order to be delivered in the first quarter of 2028, and that AirAsia would buy more if Airbus chooses to build a larger version with about 185 seats.

Airbus is still targeting a rate of 13 aircraft in 2028 — that’s when the A220 could near break-even. The ramp-up is paced by the integration of Spirit AeroSystems Holdings Inc. assets acquired last year, including a Belfast facility that makes wings for those jets.

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.

The A220 model is smaller than the airline usually flies, but the plane allows it to operate from smaller airports and in markets that have less demand for traditional narrowbody planes.

AirAsia, which operates from Malaysia, Thailand, the Philippines and Cambodia, is emerging as one of the region’s worst-hit airlines after the Iran war caused jet fuel prices to soar.

The budget carrier is particularly vulnerable because of its lack of fuel hedges, and it has less room to pass on higher fuel expenses to cost-conscious travelers.