Contents :

INTRODUCTION

AirAsia Berhad (“AirAsia” or “the Company”) is pleased to announce that further to the purchase agreement dated 31 August 2006 with Airbus S.A.S (“Airbus”) for 100 firm orders of Airbus A320 Aircraft (the “Aircraft”) with options to acquire up to a further 30 Aircraft, the Company has now expanded the purchase agreement to 50 firm Aircraft with options to acquire up to a further 50 Aircraft. In total, the purchase agreement is now extended to 150 firm orders with options to acquire up to a further 50 Aircraft. The Supplemental Agreement was signed in London at 4.00 p.m. (local time) on 8th January 2007 (12.00 a.m. Malaysian time)



Purchase Agreement	No. of Firm Orders	No. of Purchase Option
Original Agreement (11 March 2005)	60	40
Additional Agreement (31 August 2006)	40	30
Supplemental Agreement	50*	50
Total Purchase Agreement	150	50

* The 50 firm orders under the Supplemental Agreement include the 30 options which have now been exercised.

DETAILS OF THE SUPPLEMENTAL AGREEMENT

The contract is worth approximately US$3.25 billion (based on list price) for the 50 Aircraft. Under the purchase agreement, Airbus will provide extensive support functions to AirAsia. These include pre-delivery support, training for pilots, cabin crew, engineers and maintenance personnel. The delivery schedule for this aircraft order will commence on September 2009 and the remaining 49 aircraft will be delivered over a four year span. The Aircraft delivery schedule is portrayed in the table below.



Purchase Agreement	Original	Additional	Supplemental	TOTAL
FY2006	7			7
FY2007	14			14
FY2008	23			23
FY2009	16			16
FY2010		15	4	19
FY2011		18	8	26
FY2012		7	17	24
FY2013			18	18
FY2014			3	3
Total	60	40	50	150


RATIONALE FOR INCREASE IN FIRM ORDER

The additional 50 Aircraft will be employed to meet AirAsia’s rapid expansion plan and to replace the Boeing 737-300s that will be returned to the lessors upon expiry of their respective leases. Airbus has recently increased its production capacity for the Aircraft and this provided AirAsia with an opportunity to secure additional delivery slots in the future. This extension of order secures AirAsia’s fleet requirement up till 2013 and lock-in the benefits of the original agreement.

FUNDING FOR THE AIRCRAFT PURCHASE

Similar to the 15 aircraft that AirAsia has taken delivery of to-date, future deliveries will be funded by a combination of borrowings, Company's internal reserves and cash generated by its operations. The external sources of funding include but not limited to export credit guaranteed borrowings, conventional and Islamic commercial loans and sale and leaseback transactions.

FINANCIAL EFFECTS OF THE AIRCRAFT PURCHASE

As previously mentioned in the announcement dated 20 July 2006, the Aircraft Purchase is expected to contribute positively for the current financial year ending 30 June 2007 and to the future consolidated earnings of AirAsia.

The Aircraft Purchase is not expected to have an adverse effect on the net tangible assets and the issued and paid-up share capital of AirAsia.

This transaction is a transaction in the ordinary course of business of AirAsia.

DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

None of the directors and/or major shareholders of the Company and persons connected to them, insofar as the existing directors and major shareholders are able to ascertain and are aware, has any interest, direct or indirect, in the proposed Aircraft Acquisition as mentioned above.


This announcement is dated 9 January, 2007.