Lion Air Gets First New Airbus Jets..etc
Lion Air Gets First New Airbus Jets
Lion Air, Indonesia’s biggest budget airline, on Wednesday took delivery of its first three of 234 Airbus aircraft at a special ceremony in Toulouse, France, the headquarters of the European aviation giant.
Lion placed an order worth $24 billion in March 2013 for the planes, comprising 109 A320neo, 65 A321neo and 60 A320ceo jets. The first three A320s, each seating up to 156 passengers in a two-class cabin layout, are set to join the fleet of Batik Air, Lion Air’s full-service subsidiary.
“We are delighted to celebrate the delivery of our first Airbus aircraft,” Rusdi Kirana, the Lion Air founder and owner, said at the handover in Toulouse.
“These A320s, and later the A320neo and larger A321neo, will allow us to continue our expansion with one of the most modern and advanced fleets in the world.
“In service with Batik Air, the A320s will combine the highest levels of in-flight comfort for our premium services with the lowest operating costs the industry has to offer. We will be looking forward to take delivery of our Airbus aircraft in the months and years to come.”
Lion Group to Start Building Lebak Airport Next Year 2015 and IPO offering
Indonesia’s Lion Group is pushing forward with revived plans for a 2016 initial public offering now designed to fund an airport vital to securing its growth, chief executive Rusdi Kirana said.
The owner of one of the world’s fastest-growing airlines, Lion Air, is also close to placing an order for Airbus A330 wide-body jets, which it plans to use for busy domestic routes as it runs short of airport slots for smaller jets.
“We are talking now with banks about an IPO and will use the money to build this hub. Now we are using our own money but hopefully by first quarter 2016, the company will do an IPO and will use the money partly for airport expansion,” said Kirana.
He declined to say how much the company planned to raise. Privately owned Lion has long toyed with a flotation, only to conclude it could fund some of the industry’s largest plane orders from its own operations. This has changed, however, with the group’s growing focus on airport projects, Kirana said.
The 51-year-old former travel agent captured international attention when he announced record purchases of jets from Boeing and Airbus to serve Indonesia’s rapidly growing consumer class, as well as to compete with Malaysia’s AirAsia.
Rival AirAsia operates in Thailand, Indonesia, Philippines and India and its flagship Malaysian company is valued at $2.1 billion. Both companies have hundreds of aircraft on order.
The latest order for current-generation A330s will be placed “soon,” said Kirana. He said the size of the deal had not been fixed but did not dispute a suggestion by industry sources that it could involve 7-10 jets, worth $2.5 billion at list prices.
Lion had previously cancelled an order for newer but smaller Boeing 787-8 jets because it needed more seats, said Kirana, who was in France to mark the reception of its first Airbus jets, which will be used for its full-service Batik Air subsidiary.
“In Indonesia…there is a lot of demand. We keep increasing frequency. If we had the slots, we would make it every half an hour instead of every hour (on routes like) Jakarta-Medan. The only limit we have today is because of infrastructure.”
Kirana said Lion Air would not buy more planes other than the A330s before the end of 2015, but had no plans to defer any of its existing large order book of Airbus and Boeing jets. It is no longer looking at Canada’s Bombardier CSeries.
Infrastructure gap
Weak transport structure is the main obstacle to Lion’s further growth, Kirana said, so it is focusing on two projects to sidestep congestion at Jakarta’s Soekarno-Hatta’s airport.
It has won permission to operate and expand Halim Perdanakusuma airport in east Jakarta, bringing capacity to 11-12 million passengers a year from current tiny levels.
In a rare comment on the company’s finances, Kirana said this could increase Lion’s revenues by 15-20 percent next year.
Kirana said Lion would break ground in 2015 on its plans for an entirely new airport at Lebak south of the capital for the main low-cost brand with a capacity up to 50 million passengers, hoping to gain an edge over capacity-constrained rivals.
Its four runways will include one capable of taking A380 superjumbos to draw in Gulf carriers. Kirana said Lion may seek an alliance to support this but has not approached anyone yet.
“Fuel price and currency are beyond our control. They can be up and down. The most important thing is that we control things we can like infrastructure.”
The rupiah has declined over 25 percent since Lion placed a record Boeing plane order in 2011, whereas aircraft are paid for in dollars. Kirana said its dollar exposure would be cushioned by the company’s new in-house maintenance and repair facility and stock of parts, limiting dollar spending to buying new jets.
In key overseas ventures, Kirana said Lion’s Thai affiliate is faring well and looking to expand. Malindo is performing less well in Malaysia but Lion Group expects to outstrip AirAsia as Asia’s largest budget carrier by fleet size in 1-2 years.
“The growth looks promising for Thai, so we will double our fleet (there) by the end of next year.” From eight planes in the first year, Thai Lion plans to increase this to 20.
Lion Air has not decided when to start a planned local venture in Australia but will serve the country initially from Indonesia under the Batik brand. It has no immediate plans to add further international ventures, Kirana said.
Jakarta Globe