In order spread its wings in Southeast Asia, Malaysia-based AirAsia said yesterday that it will buy Indonesia's Batavia Air for USD 80 million. The airline expects to complete the acquisition, which is subject to Indonesian regulatory approval, by the second quarter of next year. In order to comply with Indonesian ownership law, AirAsia said it will hold 49 per cent of Batavia, while 51 per cent will be held by its Indonesian unit, Fersindo.
Tony Fernandes, Chief, AirAsia who recently announced he was moving to Jakarta to oversee the airline's regional 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 and further underlines our belief in the growth potential of Indonesia's aviation sector".
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 its existing shareholders, AirAsia said in a statement. "The total purchasing consideration for Metro Batavia Group is USD S80 million and will be settled in cash," the statement added.
Batavia, which has a fleet of about 30 planes, 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 financial turbulence recently, with the Transportation Ministry saying that the carrier was forced to return two leased Boeing 737 to its owners after failing to pay overdue bills.
Also next year, a Southeast Asian open-sky policy is due to come into effect, reducing barriers on regional airlines expanding their route networks to other countries, in a move expected to intensify competition. AirAsia has set-up subsidiary budget carriers in Indonesia, the Philippines and Thailand, and is planning one that will serve the Japanese market.Click here to see the original article>