KUALA LUMPUR -- Budget carrier AirAsia says it is facing a shortage of aircraft for 2017, as travel demand surges just about everywhere it flies.

"We are advancing aircraft for 2017. We are short of aircraft for 2017 at the moment," group chief executive Tony Fernandes said on Thursday at a rollout ceremony for the airline's first Airbus A320neo jet. "Per my last estimate, we are short by about eight or nine aircraft." 

Fernandes added that AirAsia, the largest budget airline in Malaysia, is still negotiating with Europe's Airbus. He suggested the shortage could be plugged either through the lease market or with forward deliveries of its orders.

For the quarter ended June, the company recorded a 10% increase in passenger volume. Its load factor, a measure of seat capacity utilization, grew 7% on the year to 87%.

Earlier this month, the company announced a $12.9 million wet lease agreement for two widebody jets from Indonesia AirAsia Extra, a unit of long-haul affiliate AirAsia X. Wet lease agreements include not only aircraft but also crew, maintenance and insurance.

Meanwhile, the group's own aircraft leasing unit, Asia Aviation Capital, is being sold. A deal is expected by the end of the year or early 2017.

Longer reach

The arrival of the A320neo makes AirAsia the first Southeast Asian carrier to fly the new model. The plane is the 172nd of a total of 575 aircraft ordered from Airbus' A320 series.

Of the total, 404 are from the A320neo family, followed by 100 A321neo orders placed at the recent Farnborough Airshow in the U.K. All told, AirAsia is Airbus' biggest A320 customer.

"The [new] aircraft will deliver fuel savings of 15% and additional range capability of [926km], which will be translated to low fares for our guests," Fernandes said. "This is further complemented with the extra seats installed, pushing the capacity up [by six seats] to 186 per aircraft."

The new planes will play a key role in the AirAsia group's route expansion plans. It is looking to fly to Istanbul and the U.K. within the next two years.

Malaysia Airlines was the last of the country's airlines to fly directly to Turkey. It suspended the flights in August 2015 when it scaled back its long-haul routes to cut costs. The carrier still flies to London's Heathrow Airport.

"Kamarudin is very keen to fly to Istanbul [...] in 2017," Fernandes said during a live Facebook chat with Chairman Kamarudin Meranun before Thursday's event. They also mentioned plans to fly to Gatwick Airport -- the second-largest international airport serving the British capital -- by the end of 2018.

The Malaysian stock exchange was closed on Friday for Malaysia Day.