Malaysia firm orders Airbus, mulls $10 UK fare

LE BOURGET, France, June 19 (Reuters) Malaysian budget airline Fly Asian Express dangled the prospect of flights between Kuala Lumpur and Manchester for as little as $10 as it ordered 15 Airbus jets worth $2.9 billion on Tuesday.

The airline plans to start operations in the third quarter using the brand name AirAsiaX following a franchise deal with low-cost regional carier AirAsia, whose chief executive Tony Fernandes has also decided to back the venture.

It is gambling on being able to extend the booming regional market for no-frills airlines to long-distance travel using the 295-seat Airbus A330-300.

It upgraded an existing firm order for 10 of the wide-body planes to 15 in a deal finalised at the Paris air show.

The deal, which was reported by Reuters earlier on Tuesday, also includes options for an additional 10 aircraft.

Fernandes said the airline was considering starting up a service between the Malaysian capital and Manchester in northern England with an introductory price of $10 each way or $20 return. The average ticket price would be $300 return, he said.

''I just have to hope passengers buy a lot of food to eat on the plane,'' he joked at a joint news conference with Airbus.

The deal also means an order for Rolls-Royce, which said it would be providing engines worth over $1 billion at list prices to power the new planes.

Airbus, owned by parent company EADS, said earlier it was heading for a record year in sales of the A330, an older wide-body model that some critics have described as obsolete as airlines snap up the lightweight Boeing 787 due to enter service next year, and as Airbus seeks to close the gap by building its new A350 series from 2013.

Fernandes said there was still a market niche for the A330, which suited the economics on most routes the airline planned to use, serving places like India, the Middle East and Korea.

''From four to eight hours flying range, this is a super plane.

It fits what we want to do,'' Fernandes told Reuters.

Reuters PY DB2207