=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/12/16/f= inancial1020EST0086.DTL --------------------------------------------------------------------- Thursday, December 16, 2004 (AP) AirAsia to buy 40 Airbus jets in deal worth about $2.5 billion (12-16) 07:20 PST KUALA LUMPUR, Malaysia (AP) -- Budget airline AirAsia will buy 40 Airbus A320 passenger jets in a deal worth about $2.5 billion to jump-start its route-expansion plan, the airline said Thursday. Malaysia-based AirAsia, which in three years has become the region's most successful no-frills carrier, will take delivery of the first aircraft in January 2006 and the remainder over a five-year period, the airline said in a statement to the Malaysian stock exchange. The deal, to be signed Friday, also includes an option to buy another 40, 180-passenger A320s and provides for Airbus to train the airline's pilots, cabin crew, engineers and maintenance staff. The deal with Airbus SAS -- the world's largest commercial airplane maker -- will enable the airline to phase out its all-Boeing Co. fleet, the New Straits Times reported Thursday. AirAsia currently owns five 737-300 Boeing aircraft and leases another 19. AirAsia said it plans to pay for the airplanes mainly with borrowings to be guaranteed by European credit agencies. The aircraft deal will bolster expansion plans for AirAsia, which now serves routes in Malaysia, Indonesia and Thailand, but hopes to eventually fly to China, India and the Philippines. It carried 1.8 million passengers in 2003 and expects 3.2 million passengers this year, rising to 6 million in 2005. In the past, AirAsia and national carrier Malaysia Airlines have express= ed interest in cooperating. AirAsia's decision to go with Airbus could prod Malaysia Airlines to do the same, enabling the two airlines to work together to secure an even better deal from Airbus. Malaysia Airlines has said it might buy at least 39 new planes to replace its aging Boeing 737s, which comprise 40 percent of its fleet. An Airbus deal could further fuel a fight in the World Trade Organization between the United States and the European Union. The United States charges that European government subsidies have allowed Airbus to undercut Boeing prices, giving Airbus an unfair advantage in the marketplace and harming the U.S. aerospace industry. On Wednesday, Airbus commercial director John Leahy said the aircraft builder expects to turn out 315 to 320 passenger jets in 2004 and has already matched the 305 it delivered last year, when it overtook Boeing's commercial aircraft arm for the first time. Boeing is forecasting a total of 285 deliveries in 2004. The European Aeronautic Defence and Space Co. owns 80 percent of Airbus. ---------------------------------------------------------------------- Copyright 2004 AP