AirAsia X Orders 25 New Airbus Jets

PARIS—Malaysian airline AirAsia 5099. said Wednesday it is buying 25 Airbus A330-300 planes, taking its low-cost model to a new level and stepping up pressure on competitors in southeast Asia.

AirAsia X, the long-haul subsidiary of Kuala Lumpur-based AirAsia, already has 26 A330-300 jets on order and leases another six.

The order, the largest single one to date for this type of aircraft, underscores one of the most aggressive efforts yet to combine long-haul travel with low-cost.

AirAsia’s chief executive, Tony Fernandes, said the combination of AirAsia X and its regional low-cost parent AirAsia will deliver a one-two punch to airlines in the Asia-Pacific region.

The order “puts a flag down in what is uncharted territory,” he said. “It signals our intent to dominate the long-haul, low-cost carrier space.”

Deliveries of the jets will start in 2015 and run through 2019. The extended-range versions of the A330 will allow AirAsia to service nonstop routes to Europe and the U.S.

The order is worth $6 billion, according to the list price of the planes. However, plane manufacturers generally offer discounts on large orders.

Mr. Fernandes said he envisions his group, which started life with just one aircraft six years ago, becoming the equivalent of Dubai-based full-service Emirates Airline, albeit specialized in the low-cost market segment.

“We have bases and hubs in many countries, and potentially we can do much more,” he said.

AirAsia X will be paying for its new A330s with its cash flow plus some debt. It hasn’t decided yet on which engines to use. Mr. Fernandes has said on several occasions that he would like Airbus to equip the A330 with larger engines to deliver greater range.

“I think they are looking at it and evaluating it to see whether it makes sense or not,” he said. AirAsia and AirAsia X operate all-Airbus fleets. It would give Airbus a huge competitive advantage over its U.S. rival, Boeing, he said.

Airbus repeatedly has said it is studying ways to improve its products but isn’t working on any specific project for a larger engine frame.

Airbus is developing a version of its top-selling, single-aisle A320 with a new engine design that airlines are snapping up to take advantage of fuel savings.

Airbus executive Fabrice Brégier said that although AirAsia has well over 600 firm aircraft orders and options outstanding with Airbus, “it will need more.”