KUALA LUMPUR: AirAsia Bhd is in talks with aircraft manufacturers for a major new aircraft order of up to 150 aircraft, said Capital A Bhd chief executive officer (CEO) Tan Sri Tony Fernandes.

Fernandes described the upcoming order as the final piece in the airline group's 15-year fleet strategy.

He said the order will be finalised by next month and although he did not specify the aircraft model under consideration, he said that the discussions are ongoing with several aircraft manufacturers, including Embraer and Airbus.

"We are looking at it very aggressively. I hope to make an announcement in the next month. There are two contenders for that aircraft order, and that would complete our network strategy," Fernandes said during a media briefing yesterday.

In December 2024, he told the media that AirAsia was in talks with Airbus, Embraer and the Commercial Aircraft Corporation of China Ltd (COMAC) as the budget carrier plans to expand its fleet.

AirAsia Aviation Group Ltd (AAGL) deputy CEO Farouk Kamal told Business Times in a separate interview recently that both the A220 and the Embraer E2 aircraft, with capacities of 130 to 160 seats, are under evaluation for deployment on thinner routes and new point-to-point services.

AAGL CEO Bo Lingam also said in the interview that the addition of smaller narrowbody aircraft with longer range capabilities would enhance the group's fleet mix and open up opportunities across the region such as Indonesia, the Philippines, Cambodia or even Kota Kinabalu.

In May this year, Airbus Asia Pacific president Anand Stanley said the aircraft manufacturer is eyeing Malaysia as a key market for its A220 aircraft given the country's position as a regional aviation hub and its growing demand for efficient, next generation aircraft that are capable to fly both the short-haul and long-haul routes.

Yesterday AirAsia announced an order for 50 A321XLR (extra long-range aircraft) worth RM51.7 billion (US$12.25 billion) with conversion rights for 20 more of the same aircraft type.

Fernandes signed a Memorandum of Understanding (MoU) for the aircraft order with Airbus Commercial Aircraft CEO, Christian Scherer yesterday in Paris. The signing ceremony was witnessed by Prime Minister Datuk Seri Anwar Ibrahim.

Speaking on the future of AirAsia's outstanding A330neo (new engine option) order, Fernandes said the airline is currently discussing with Airbus on the matter.

"We'll have to wait and see. We're now discussing. There is another order we are working on with two aircraft manufacturers for up to 150 aircraft. We think we will know that in the next month."

"This is a very long process but we have to get it right. At that point, we would complete our strategy and we would know our direction on the A330," he added.

Fernandes said there have been no cancellations to the A330neo order at this point, although the direction will be clearer once the new aircraft order plan is finalised.

He added that the airline group's immediate focus is to restore its entire 255 fleet back into operation after the post-pandemic downturn. He expects all aircraft to be back flying by August this year.

"My number one priority is to get all our planes back. We had a very good discussion with our OEM (original equipment manufacturer) in getting the right engines and supplies back," he said.

Fernandes added that AirAsia has also been optimising its network. One recent example was replacing the A330 on the Kuala Lumpur-Perth route with the more efficient A321neo, aligning with group's narrowbody fleet strategy.

"We are now confident to take that next stage in regrowing AirAsia," he said, adding that the airline's recent order of 50 A321XLRs as a signal that AirAsia is now in a position to grow.

In addition to operational recovery, Capital A is also finalising a corporate restructuring that involves the sale of its aviation businesses – AirAsia and AAGL to AirAsia X for RM6.8 billion.

As part of the deal, Capital A will receive RM3 billion worth of AirAsia X shares, while the latter will assume RM3.83 billion in debt belonging to Capital A.

The sale will see all short-haul operations under AirAsia to be housed under AirAsia X and the consolidated company will be rebranded as AirAsia Group.

Fernandes said the sale of the aviation businesses is key to Capital A's plan to exit Bursa Malaysia's Practice Note 17 (PN17) status.

"The first bit of the most important part on this conversation is creating AirAsia group, and that's the disposal of AirAsia Group from Capital A…Once we dispose of aviation, then Capital A is virtually out of PN17, just some administrative issues and court issues," he said.

Fernandes said Capital A has secured most of the required consent letters that it needed from its creditors and the RM1 billion of equity. The remaining hurdle is approval from Thai Securities and Exchange Commission (SEC), which he hopes to resubmit for in the coming weeks.

Capital A needs the green light from the Thai SEC on the proposed disposal of AAGL.

AAGL operates passenger airline services through subsidiaries in Thailand, Indonesia, the Philippines and Cambodia.

Once the sale has gone through, the rebranded AirAsia Group will continue to be listed on Bursa Malaysia while Capital A will focus on six of its non-aviation businesses.

The businesses include its engineering arm, Asia Digital Engineering, logistics unit Teleport, travel platform AirAsia MOVE, e-wallet BigPay, in-flight food brand Santan, and branding unit ABC.

Fernandes said the six subsidiaries would be looking for a dual listing, potentially in Hong Kong.

"Capital A is very much looking at a dual listing and raising capital independently. AirAsia Group will be a Malaysian listed company," he said.