Positive Move That AirAsia Defers Their AirBus Order

Blogged many times on AirAsia before (LOL! 57 times only. :P ) Past postings can be found here: AirAsia.

Recently AirAsia had been deferring the delivery of new air crafts and yesterday, AirAsia defers taking delivery of 7 new AirBus from 2011 to 2015.

Of course, I could sarcastic and cynical by saying that AirAsia really could not afford to take delivery and it would be financial suicide to do so. Seriously. Its balance sheet is still way too stretched to take on more debt to finance the delivery of the new air crafts.

However, let me say this, I have to give AirAsia some credit for eating the humble pie and for successfully persuading AirBus to allow them to defer the delivery of the air crafts and more so, this move really gives them a fighting chance to survive and to overcome their insanity of building a company which was clearly over burdened by the immense corporate debts they took upon to finance the building of their business.

Yeah.. AirAsia should be ok for the next one year or so... yeah.. this is a POSITIVE CORPORATE exercise... it's certainly extremely crucial that AirAsia made this postponement of delivery.... but... deferring is only a postponement.... and in regardless, these air crafts order still needs to be delivered!

On Business Times today:

• AirAsia defers taking 7 new Airbus planes
  
  By Presenna Nambiar Published: 2010/08/05
  
  Asia's largest budget airline has deferred the delivery of seven A320 ordered from European planemaker Airbus to 2015 instead of next year.
  
  Asia's largest budget airline, AirAsia Bhd (5099), has deferred the delivery of new aircraft for a third time, blaming capacity constraints at the existing low-cost carrier terminal (LCCT-KLIA) in Sepang.
  
  It has deferred the delivery of seven A320 ordered from European planemaker Airbus to 2015 instead of next year.
  
  AirAsia's deferment now numbers 23 A320.
  
  It postponed the delivery of new aircraft for the first time in July last year, for eight A320 it was to have received this year. The second deferment was in October, for another eight slated for delivery next year.
  The latest deferment brings the number of new planes to be delivered next year down to eight and those it will receive in 2015 up to nine.
  
  The orders in 2007 for a total of 175 A320 were initially over delivery schedules from 2010 to 2014.
  
  In 2007, the airline was still operating out of the existing LCCT-KLIA.
  
  "Until the new LCCT is constructed, the current infrastructure at the low-cost terminal is not able to accommodate AirAsia's fleet expansion in the number of aircraft originally scheduled to be delivered in 2010 and 2011," it told Bursa Malaysia yesterday.
  
  The new LCCT is expected to be ready by March 2012.
  
  When announcing the first set of deferments in July last year, AirAsia group chief executive officer Datuk Seri Dr Tony Fernandes had said that it would deploy most of the planes to its Indonesian and Thai operations.
  
  The latest deferment appears to point to a change in its plans.
  
  Fernandes had warned of another round of deferments during its first quarter teleconference with analysts and media in June.
  
  He said the airline would look to reducing rollouts to match cash flow.
  
  "We want to maintain our current gearing level," Fernandes had said.
  
  AirAsia's net gearing ratio as at March 31 this year was 2.25 times
  

LOL! Building constraints????

I guess the 'English' is much better this time around. :P

Seriously!

Last August 2009, AirAsia Defends Deferring Of Aircraft, Blames Lack Of Parking!

No joke! They said no parking space!

• "It won't have any effect on us. We have so much growth anyway. It all depends on how much more you want to grow. We would like to have the aircraft, provided we could park them. Where do we park them?" Fernandes said.

LOL!

At least, in today's paper, AirAsia apparently discovered the meaning of the word 'HUMBLE'.

Let's be frank.

They over expanded. They gave an insane huge order for air crafts. They carried too much debts. Deferring air crafts is the ONLY sensible option.

The last couple of sentences in red underline..

• He said the airline would look to reducing rollouts to match cash flow. "We want to maintain our current gearing level,"

That says it all!

Anyway... a postponement is a postponement is a postponement. Come 2014 (last August AirAsia deferred 8 AirBus to 2014) and 2015, these air crafts still needs to be delivered. Which means, from now till then, AirAsia still needs to ensure that it builds up its cash flow to ensure it can accept delivery of these air crafts that they had ordered. Unless of course, AirAsia can pull off another miracle by asking AirBus to allow them to defer yet once more. :P

ps: yeah, AirAsia X listing would indeed help AirAsia financials. It too is required. And it is the ONLY OTHER logical and sensible option for AirAsia to rescue its dire balance sheet.

ps: just my flawed views.

ps: I am well aware that AirAsia's cash flows had certainly improved tremendously.