February 8, 2018 / 12:40 PM / a year ago

AIRSHOW-AirAsia seen sticking with Airbus A330neo -source

(Adds Fernandes comments to FT)

By Tim Hepher

SINGAPORE, Feb 8 (Reuters) - AirAsia looks set to confirm an order for Airbus wide-body jets, soothing nerves at the European planemaker after Boeing tried to swoop on its biggest Asian customer and extend a lead in the lucrative long-haul market.

A person familiar with the discussions told Reuters that Air Asia co-founder Tony Fernandes was likely to reconfirm a commitment for 66 A330neo jets worth $19.6 billion as the Malaysian group looks to expands its long-haul operations.

Airbus and AirAsia declined comment. But Fernandes later told the Financial Times that A330neo flight test results presented by Airbus were better than expected, adding, “We are looking on it much more favourably”.

In what would have been a major setback for Airbus, Fernandes announced last week that he was looking at buying Boeing 787s to expand the fleet of long-haul arm AirAsiaX, as well as the A330neo and A350.

The decision by Asia’s largest budget carrier - currently exclusively an Airbus customer - is regarded as crucial as Airbus tries to defend its slow-selling A330neo and Boeing looks to cement an advantage in wide-body sales, industry sources say.

Airbus and Boeing are locked in a fierce battle in this busy sector of the aircraft market, just above 250 seats.

The feud pits the A3330neo against the newer Boeing 787 as the two firms pursue airlines from Asia to America and Europe.

Airbus’s new sales chief Eric Schulz told Reuters on Wednesday that he aimed to win two new customers this year for the A330neo, a re-engined version of Airbus’s most-sold wide-body jet that enters service this summer.

On Thursday, Schulz said he had presented positive flight test data to AirAsia executives at the Singapore Airshow, where Airbus also finalised an agreement to provide computerised predictive maintenance to the Malaysian budget airline group.

Airbus wants to fill unsold production spots for its A330 range to preserve its role as a promising source of cash for the company’s other operations.

Boeing is looking to cement sales of its newest wide-body jet and squeeze demand for the A330 family, whose unexpected rebound in recent years - helped by 787 delays - had not been anticipated when Boeing drew up the business case for the 787.

Tightening pressure on Airbus after strong sales, Boeing is ramping up production of the 787 to 14 aircraft a month from 12, but competition with the A330 has forced it to accept lower margins for its own model than planned, aircraft analysts say.

Many see 2018 as a potentially decisive year for the A330neo with consequences on the profit margins of both planemakers.

“It’s going to be a dogfight,” an industry executive said. (Reporting by Tim Hepher and Liz Lee in Kuala Lumpur; Editing by Himani Sarkar and Susan Fenton)

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