Business

Friday December 17, 2010

AirAsia invests 40% stake in Philippine ops

By LEONG HUNG YEE
hungyee@thestar.com.my


MANILA: AirAsia Bhd, which has formed a 40:60 joint venture (JV) with three Philippine partners, is investing US$8mil for its 40% stake in AirAsia Philippines.

We will be funding it internally via equity, group CEO Datuk Seri Tony Fernandes said after a signing ceremony between AirAsia and Antonio O. Cojuangco Jr, Dr Michael L. Romeo and Marianne B. Honours yesterday.

He expects AirAsia Philippines to be profitable straight away and contribute to group revenue immediately as a lot of ground works had been done.

Datuk Seri Tony Fernandes ... ‘AirAsia Philippines will be profitable.’

The set-up cost is very low. There are already flights from Kuala Lumpur to the Philippines. Everything is there already, Fernandes said.

AirAsia will hold 40% equity in AirAsia Inc, the JV company set up for AirAsia Philippines. The new airline is expected to begin operations in August 2011 with an initial working capital of US$25mil.

To a question, Fernandes said it was in the midst of getting approval from authorities for its airline operations in the Philippines.

He added that it was currently evaluating its choices of airport between Clark and Cubic International Airport as its hub in the archipelago.

The results (decision on its hub) should be in a couple of weeks, Fernandes said, adding that the Philippine market offered a lot of potential.

AirAsia Philippines will leverage on AirAsia's strength into markets in China, South Korea and Japan from the Philippines and will enable it to tap into existing prime markets such as Singapore, Hong Kong and Taiwan.

Fernandes said the group took a while to decide to go into the Philippine market as it had to find the right partners.

AirAsia Philippines will begin operation with two aircraft.

Fernandes, however, remained mum on its route in the Philippines.

There are so many places to go. We will be flying both domestic and international, he said.

We will not cannibalise the market. We are looking to grow it. With the 140 routes we fly to, 50% are routes never before flown; you will see the same recipe in the Philippines.

Asked if AirAsia's plan to set up a unit in Vietnam was taking a back seat, Fernandes said it would focus on the Philippine market at the moment.

AirAsia also has subsidiaries in Indonesia and Thailand.

Greater connectivity across Asia would not only boost economic growth by providing better access to markets but also enhance links within travel, trade and tourism.

This initiative will also help bring Asian closer by enabling intra-Aseans travel with AirAsia's connectivity and route network via our strategic hub, Fernandes said.

Honours said the setting up of AirAsia Philippines would create healthy business competition and make air travel more affordable for Filipinos.

As part of the JV, AirAsia will provide technical, operational and commercial support on an arms length basis to AirAsia Inc to ensure commercial, operational, branding and service level uniformity throughout AirAsia's operations.

Meanwhile, AirAsia also announced that it would extend its association with the Asian Basketball League by sponsoring the 2009-2010 Grand Finals Champion, Philippine Patriots.

The three-year exclusive deal will see Philippines Patriots provide full branding rights to AirAsia including the use of player images and player appearances at AirAsia events across Asia.

AirAsia plans to use these images for community-driven events both on and off season throughout the tenure of partnership.


AIRASIA : [Stock Watch] [News]

For latest Bursa Malaysia indices, charts and other information click here

  • E-mail this story
  • Print this story
  • Bookmark and Share