AirAsia buys Indonesia' Batavia Air
Low cost carrier Air Asia has announced said that it is to buy Indonesia’s Batavia Air for US$80 million (B2.4 billion), with the acquisition expected to be complete by the second quarter of next year.
Friday 3 August 2012, 12:52PM
AirAsia chief Tony Fernandes, who has announced he is moving to Jakarta to oversee AirAsia’s expansion, described the acquisition as a “fantastic opportunity”.
He said it would “accelerate our growth plans in one of the most exciting aviation markets in Asia [Indonesia] and further underlines our belief in the growth potential of Indonesia’s aviation sector”.
Demand for air travel in Indonesia, with a growing middle class among its 240 million population, has been soaring.
The purchase will be carried out in two stages, with the acquisition of a majority 76.95 per cent stake to be followed by the remaining 23.05 per cent held by existing shareholders, AirAsia said in a statement.
“The total purchasing consideration for Metro Batavia Group is US$80 million and will be settled in cash,” the statement added.
The carrier has been shoring up its presence in the region against a host of other competitors, including Lion Air, Indonesia’s largest low cost carrier.
Batavia, which has a fleet of about 30 aircraft, mainly flies domestic routes and a few international routes such as to Jeddah in Saudi Arabia, Singapore and Guangzhou in southern China.
It has been facing tough times recently, with the Transport Ministry saying the carrier was forced to return two leased Boeing 737 airliners to their owners after failing to pay overdue bills.
Indonesia’s domestic airlines carried more than 60 million passengers last year, and the Indonesia Air Carriers Association predicts a 52 per cent increase in passenger numbers by 2015.
With the launch of the Asean Economic Community in that year will come a Southeast Asian open-skies policy, reducing barriers to regional airlines expanding their route networks to other countries.
Earlier this year Lion Air sealed a $22.4 billion (B672 billion) deal for 230 Boeing 737 aircraft, billed as the largest commercial airplane deal for the US plane maker. This would allow Lion Air to go head-to-head with AirAsia.
In reply, AirAsia has set up subsidiary budget carriers in Indonesia, the Philippines and Thailand, and is planning one that will serve Japan.