jetjockey696
26th Sep 2011, 09:25
The new majority partner in Indonesia’s debt-strapped and grounded Mandala Airlines hopes to have the budget carrier flying within the next 90 days, Saratoga Capital’s co-founder Sandiaga Uno told the Jakarta Globe on Tuesday.
It will use a new fleet of Airbus 320 planes as a first step to building a fleet that can compete regionally and domestically with powerhouses like Lion Air and AirAsia, he said.
Acknowledging intense concerns inside his own company about the deal for the failed carrier, Sandiaga said he is counting on the middle class to propel Mandala back to profitability.
“The entire firm felt very jittery about this — the whole company and the directors,” he said. “But we believe if we have the right execution this will play out very well.
“Business always involves risk,” he added, “especially when you operate in Indonesia, let alone in the aviation industry.”
Saratoga will hold 51 percent in the reborn carrier while Singapore-based Tiger Airways will take a 33 percent stake, it was announced on Saturday, following five months of due diligence and negotiations over the deal, which now must gain formal government approval.
Sandiaga said he could not disclose the amount the firm is investing to acquire Mandala.
Overwhelmed by Rp 2.4 trillion ($269.2 million) of debt, Mandala stopped flying in January. Initial hopes to have the fleet back in the air within 45 days dragged on for months, leaving many to wonder if the company would ever fly again.
If all goes according to plan, he said, an IPO for the carrier is likely in “one to two years.”
“We are trying to create value and one of the ways to create value is that somewhere on the horizon we will be seeking an IPO. But definitely it has to be a much more sizeable airline than it is today.”
Mandala, he said, will get a complete overhaul under the direction of Tiger Airways and will soon begin flying international routes – including to Singapore.
“We like this deal because Tiger Airways will be a strategic partner to provide us with expertise in reviving the company. Mandala is a good brand. It has a very strong following.”
Sandiaga said the existing Mandala fleet, which flew to 25 domestic destinations when it was grounded, will be scrapped in favor of A320s provided by Tiger. He said the airline would initially start with the government minimum of 10 planes – five owned by the airline and five leased – but plans to aggressively expand in the near future. In 2010, Mandala had eight aircraft.
“We bought the name, the license, a few pilots, infrastructure and a track record of operating in this market,” he said of the assets acquired from Mandala. “We are going to put in the working capital that will be required to start the operation again.”
He said Mandala failed because it expanded too quickly, took on too much debt and could not overcome safety problems quickly enough. He said that with Tiger as a strategic partner, those miscues can be avoided.
In addition, Sandiaga said he is “quite bullish on the sector” and that Indonesia’s rapidly growing middle class will drive expansion into growing markets like Singapore and Australia. “It has to be a regional story. It has to be an Asean story. It has to be the story of the growing importance of Indonesia in a Southeast Asian context.”
Given those plans, Mandala’s new partner seems headed for a battle with AirAsia and its charismatic leader Tony Fernandes from Malaysia, whom Sandiaga described as a “good friend and a fierce competitor.”
AirAsia has recently acquired a 20 percent stake in Malaysia Airlines and is expanding operations in Indonesia. Mandala once shared Soekarno-Hatta airport’s new Terminal 3 with AirAsia and Mandala retains the right to use that terminal, an AirAsia source said recently.
Jakarta Globe...
It will use a new fleet of Airbus 320 planes as a first step to building a fleet that can compete regionally and domestically with powerhouses like Lion Air and AirAsia, he said.
Acknowledging intense concerns inside his own company about the deal for the failed carrier, Sandiaga said he is counting on the middle class to propel Mandala back to profitability.
“The entire firm felt very jittery about this — the whole company and the directors,” he said. “But we believe if we have the right execution this will play out very well.
“Business always involves risk,” he added, “especially when you operate in Indonesia, let alone in the aviation industry.”
Saratoga will hold 51 percent in the reborn carrier while Singapore-based Tiger Airways will take a 33 percent stake, it was announced on Saturday, following five months of due diligence and negotiations over the deal, which now must gain formal government approval.
Sandiaga said he could not disclose the amount the firm is investing to acquire Mandala.
Overwhelmed by Rp 2.4 trillion ($269.2 million) of debt, Mandala stopped flying in January. Initial hopes to have the fleet back in the air within 45 days dragged on for months, leaving many to wonder if the company would ever fly again.
If all goes according to plan, he said, an IPO for the carrier is likely in “one to two years.”
“We are trying to create value and one of the ways to create value is that somewhere on the horizon we will be seeking an IPO. But definitely it has to be a much more sizeable airline than it is today.”
Mandala, he said, will get a complete overhaul under the direction of Tiger Airways and will soon begin flying international routes – including to Singapore.
“We like this deal because Tiger Airways will be a strategic partner to provide us with expertise in reviving the company. Mandala is a good brand. It has a very strong following.”
Sandiaga said the existing Mandala fleet, which flew to 25 domestic destinations when it was grounded, will be scrapped in favor of A320s provided by Tiger. He said the airline would initially start with the government minimum of 10 planes – five owned by the airline and five leased – but plans to aggressively expand in the near future. In 2010, Mandala had eight aircraft.
“We bought the name, the license, a few pilots, infrastructure and a track record of operating in this market,” he said of the assets acquired from Mandala. “We are going to put in the working capital that will be required to start the operation again.”
He said Mandala failed because it expanded too quickly, took on too much debt and could not overcome safety problems quickly enough. He said that with Tiger as a strategic partner, those miscues can be avoided.
In addition, Sandiaga said he is “quite bullish on the sector” and that Indonesia’s rapidly growing middle class will drive expansion into growing markets like Singapore and Australia. “It has to be a regional story. It has to be an Asean story. It has to be the story of the growing importance of Indonesia in a Southeast Asian context.”
Given those plans, Mandala’s new partner seems headed for a battle with AirAsia and its charismatic leader Tony Fernandes from Malaysia, whom Sandiaga described as a “good friend and a fierce competitor.”
AirAsia has recently acquired a 20 percent stake in Malaysia Airlines and is expanding operations in Indonesia. Mandala once shared Soekarno-Hatta airport’s new Terminal 3 with AirAsia and Mandala retains the right to use that terminal, an AirAsia source said recently.
Jakarta Globe...