Singapore budget carrier Tigerair has cancelled existing orders for nine Airbus A320 scheduled for delivery in 2014 and 2015, addressing concerns about overcapacity in the short term even as it signed a new order for 37 aircraft that will be delivered between 2018 and 2025.
The order for 37 fuel-efficient Airbus A320neo aircraft powered by Pratt & Whitney engines is worth around US$3.8 billion based on the list price.
Tigerair has the option to increase the order by up to 13 aircraft and also convert the model to a bigger variant.
"This deal effectively dissipates some concerns over a potential capacity overhang in the next couple of years," Tigerair's group CEO Koay Peng Yen said in a statement on Monday.
The new contract will allow the budget carrier to build up its business at a more measured pace, he added.
Southeast Asia has seen a boom in low-cost carriers over the past decade.
But analysts are concerned about overcapacity, as regional carriers such as AirAsia, Lion Air and Cebu Pacific have hundreds of aircraft on order.
Mr Koay told Channel NewsAsia last week that Tigerair was refocusing its strategy and looking to strike up a greater network of partnerships to maintain its presence abroad.
Tigerair, whose biggest shareholder is Singapore Airlines, currently has 48 Airbus A320s in service.
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