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AirAsia is in talks with Airbus to convert some Airbus aircraft orders into long-range jets, according to sources

AirAsia, a budget airline in Asia, is negotiating with Airbus about converting some narrow-body orders into the long-range A321XLR as it seeks to exit its restructuring process.

Tony Fernandes is the CEO of AirAsia's owner Capital A Group. He said last month that he had been in discussions to purchase 50 to 70 Airbus models within the next one to three months. However, he indicated the first priority of the group was to complete its financial reorganisation.

Sources said that a deal could be reached as soon as this week, when Malaysian Premier Anwar Ibrahim travels to Paris. Separately, a source stated that a deal wasn't guaranteed.

AirAsia, based in Malaysia, is Asia's biggest low-cost carrier and Airbus's largest customer. It has more than 350 aircraft on order.

After a financial slump following COVID-19, it has steadily restructured its order book.

They said that such a deal wouldn't necessarily increase AirAsia’s total outstanding orders with Airbus, but it would support the longest-range narrow body jet model in the industry.

The talks for a possible large order of smaller A220 aircraft have been put on hold for the time being, they said.

Fernandes has stated that Airbus's long-range aircraft are a key part of his vision to expand AirAsia globally.

Fernandes stated this week that he is looking for a hub within the Gulf region. AirAsia has been in contact with four potential locations, including Saudi Arabia and Ras Al Khaimah in the United Arab Emirates.

Bloomberg News reported on Thursday that AirAsia may place orders for narrow body jets during Prime Minister's visit, but that the deal is not guaranteed.

Airbus and AirAsia didn't immediately respond to comments. (Reporting and editing by Kim Coghill, Jacqueline Wong, Lisa Barrington)

(source: Reuters)