Batavia Air Acquisition Hits Turbulence
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Batavia Air Acquisition Hits Turbulence
The planned acquisition of Indonesia’s Batavia Air by Malaysia’s AirAsia and Indonesia’s Fersindo Nusaperkasa is on the verge of collapse, a source revealed on Tuesday.
The source said the potential failure was partly due to a request by AirAsia and Fersindo to lower the purchase price from that agreed to earlier. Metro Batavia, the existing shareholder, has refused to lower the price.
Batavia Air’s leadership has met to plan a consolidation to reduce the airline’s operational costs, the source said.
“The meeting was led by Yudiawan Tansari, Batavia Air’s president director, who was assisted by the operational director Herman Santoso,” the source said.
Among the moves to greater efficiency being considered are scrapping airline crew transportation, reducing staff numbers and improving the utilization of its fleet.
The airline operates 30 aircraft on domestic routes and to select international destinations including Singapore, Jeddah in Saudi Arabia, and Guangzhou in China.
In a memorandum of understanding signed in July, AirAsia and its partner bought all of Batavia Air from Metro Batavia for an estimated total price of Rp 750 billion ($77.9 million).
Through this deal, AirAsia would own a 49 percent stake in Batavia Air, while the remaining 51 percent would be owned by Fersindo.
The acquisition was expected to be completed in the second quarter of 2013, but is still subject to regulatory approvals in Indonesia.
AirAsia and Fersindo are partners in Indonesia AirAsia, the local airline unit of the Malaysia-based budget carrier.
Herman declined to comment. IAA communications manager Audrey Progastama Petriny also declined to comment.
Aviation analyst Ruth Hanna Simatupang speculated that the cause of the request to lower Batavia’s selling price was the airline’s hefty debts. No recent data on Batavia’s debts are available on the company’s website.
“If the acquisition fails, Batavia Air must reduce costs to survive,” Ruth said.
AirAsia group chief executive Tony Fernandes did not respond to a request for comment.
Investor Daily.. October 11, 2012
The source said the potential failure was partly due to a request by AirAsia and Fersindo to lower the purchase price from that agreed to earlier. Metro Batavia, the existing shareholder, has refused to lower the price.
Batavia Air’s leadership has met to plan a consolidation to reduce the airline’s operational costs, the source said.
“The meeting was led by Yudiawan Tansari, Batavia Air’s president director, who was assisted by the operational director Herman Santoso,” the source said.
Among the moves to greater efficiency being considered are scrapping airline crew transportation, reducing staff numbers and improving the utilization of its fleet.
The airline operates 30 aircraft on domestic routes and to select international destinations including Singapore, Jeddah in Saudi Arabia, and Guangzhou in China.
In a memorandum of understanding signed in July, AirAsia and its partner bought all of Batavia Air from Metro Batavia for an estimated total price of Rp 750 billion ($77.9 million).
Through this deal, AirAsia would own a 49 percent stake in Batavia Air, while the remaining 51 percent would be owned by Fersindo.
The acquisition was expected to be completed in the second quarter of 2013, but is still subject to regulatory approvals in Indonesia.
AirAsia and Fersindo are partners in Indonesia AirAsia, the local airline unit of the Malaysia-based budget carrier.
Herman declined to comment. IAA communications manager Audrey Progastama Petriny also declined to comment.
Aviation analyst Ruth Hanna Simatupang speculated that the cause of the request to lower Batavia’s selling price was the airline’s hefty debts. No recent data on Batavia’s debts are available on the company’s website.
“If the acquisition fails, Batavia Air must reduce costs to survive,” Ruth said.
AirAsia group chief executive Tony Fernandes did not respond to a request for comment.
Investor Daily.. October 11, 2012
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Going to be a lot harder in Indonesia for TF to do what he wants. Not like Malaysia is it Tony? They won't bend over so easily for you so you can get whatever you want like they do up in KL.
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AirAsia Founders Eye $500m IPO
I guess. TF needs some pocket money... Running low.. Aviation is a small community... so the Indonesian government know what he up to... expecially what he has done to the malaysian aviation community ...total destroy it. no growth, no competition, expensive airline tickets, no jobs for local pilots..and total control of the aviation community. Go and find another weak government to bulls**T to.
AirAsia Founders Eye $500m IPO
The founders of Malaysia’s AirAsia, Tony Fernandes and Kamarudin Meranun, are set to kick off an initial public offering spree in 2013 with three listings worth more than Rp 4.8 trillion ($500 million).
The plan comes at a time when privatization schemes and economic growth have cemented Malaysia’s position as Asia’s top destination for IPOs, accounting for $7.9 billion of the $30.03 billion worth of new listings in the Asia-Pacific region this year, according to Thomson Reuters data. By comparison, IPOs in Hong Kong have raised $1.81 billion and those in Singapore have raised $3.44 billion so far this year.
Malaysia’s Tune Group, a financial services-to-discount hotel conglomerate owned by Fernandes and Kamarudin, is expected to launch a $65 million IPO of its insurance arm, Tune Insurance, not later than the first quarter of 2013, according to two sources with direct knowledge of the deal.
“They are looking at a market capitalization of $260 million,” one of the sources said on Wednesday, declining to be named as the matter is still private.
CIMB Group Holdings, ECM Libra Financial Group and RHB Capital are involved in the flotation, said the second source.
Fernandes and officials with Tune were not available to comment.
Meanwhile, AirAsia’s long-haul arm, AirAsia X, recently hired CIMB, Malayan Banking and Credit Suisse Group AG for a $250 million IPO expected early next year.
The group is looking to list its Indonesia operations, Indonesia AirAsia, by the first quarter of next year in a deal that could raise up to $200 million.
The listing plans also come at a time when Fernandes is stepping down as the chief executive officer of the Malaysian-listed airline to focus on regional growth through Indonesia.
The group’s plan to buy up to 100 Airbus jets, potentially worth around $9 billion, is designed to fuel the growth of what is becoming a cluster of related airlines under Fernandes, who placed a record order for Airbus jets last year. With an operating fleet of more than 116 aircraft, AirAsia has ordered a total of 375 Airbus jets as part of dramatic expansion plans that include the acquisition of Indonesia’s Batavia Air.
AirAsia has said it will accelerate deliveries as rising demand helps it offset high fuel costs.
Not all analysts are convinced by AirAsia’s expansion plans.
Some local bankers say profits could be crimped by pressure from potential losses at start-up units in the Philippines and Japan and competition from new players such as Malaysia’s Malindo Airways next year. AirAsia’s shares have fallen 20.26 percent in the past three months.
AirAsia made a net operating profit of 130.94 million Malaysian ringgit ($42.64 million), excluding one-off items, in the second quarter this year, down slightly from the same quarter last year.
Net profit was boosted by a one-off gain of 1.16 billion ringgit following a share sale at its Thai unit.
Reuters..October 11, 2012
Budget carrier AirAsia is hoping for a smoother ride ahead after a turbulent week of trading.
The company’s market value shed hundreds of millions of ringgit last week on the news of a low-cost value carrier, Malindo Airways becoming a player in the region.
AirAsia’s shares dropped 5.3 percent to close at 3.02 ringgit on Wednesday, then dropped to as low as 2.83 ringgit by midday Thursday. The stock then regained some ground, closing on Friday at 3.10 ringgit.
This rapid shifts in price came amid news that Malindo Airways, which is 49-percent-owned by Indonesia’s Lion Group, will start operations in mid-2013.
AirAsia had a market value of 8.39 billion ringgit as of Thursday. It was among the most active stocks with a total of 102.15 million shares traded.
OSK Research analyst Ahmad Maghfur Usman said that the scale of Malindo Airways’ operations will grow and competition among airlines will intensify if the new entrant fulfils its pledge to price its fares as low — or even lower—than AirAsia’s.
He said Malindo Airways has an advantage in its cost structure because its new-generation Boeing B737-900s have a capacity of 220 seats compared to 180 seats on AirAsia’s aircraft.
Its costs will be more competitive as well, because maintenance, repairs and overhaul services will be performed by major shareholder and National Aerospace and Defense Industries subsidiary, Airod.
“Competition is good for consumers, further stimulating the demand for low-cost travel,” Maghfur said in a report.
Maybank Investment Bank analysts Wong Chew Hann and Chai Li Shin said AirAsia’s cost advantage has narrowed with the entry of Malindo Airways and this will intensify competition.
“Yields are set to decline, and profit contribution from AirAsia’s biggest market will recede,” they said.
They added that Malindo Airways scores higher marks on its value proposition, because it will offer bigger seats, free snacks, in-flight entertainment and a jetway for passengers.
OSK Research maintained its “buy” rating on AirAsia at a target price of 4.10 ringgit, while Maybank IB has placed the stock under review at a price of 3.36 ringgit.
“While we are confident of AirAsia’s strong business foundation and its ability to fend off competition ... we are concerned on the sustainability of its industry-leading profit margins,” Wong and Chai said.
“We maintain our earnings forecasts and target price, pending firm dates on when [Malindo Airways] operations will start and how many aircraft will be deployed.”
They also said that Malaysia Airports Holdings Berhad would be a primary beneficiary of the new joint-venture airline between NADI and Lion Group, which also operates Lion Air.
Malindo Airways would promote higher traffic volume, hence better earnings prospects for MAHB, they added.
“The additional traffic growth will translate to higher utilization rates and fuel profit growth at MAHB. Furthermore, Malindo Airways has publicly announced that they will use the jetways [at Kuala Lumpur International Airport 2], which is an additional revenue stream for MAHB,” they said.
KLI2, which is under construction, will be the low-cost carrier’s terminal.
The articles on this page are a weekly focus on Malaysian business provided by the Business Times desk of the New Straits Times in Kuala Lumpur.AirAsia Endures a Roller-Coaster Week...September 17, 2012
AirAsia Founders Eye $500m IPO
The founders of Malaysia’s AirAsia, Tony Fernandes and Kamarudin Meranun, are set to kick off an initial public offering spree in 2013 with three listings worth more than Rp 4.8 trillion ($500 million).
The plan comes at a time when privatization schemes and economic growth have cemented Malaysia’s position as Asia’s top destination for IPOs, accounting for $7.9 billion of the $30.03 billion worth of new listings in the Asia-Pacific region this year, according to Thomson Reuters data. By comparison, IPOs in Hong Kong have raised $1.81 billion and those in Singapore have raised $3.44 billion so far this year.
Malaysia’s Tune Group, a financial services-to-discount hotel conglomerate owned by Fernandes and Kamarudin, is expected to launch a $65 million IPO of its insurance arm, Tune Insurance, not later than the first quarter of 2013, according to two sources with direct knowledge of the deal.
“They are looking at a market capitalization of $260 million,” one of the sources said on Wednesday, declining to be named as the matter is still private.
CIMB Group Holdings, ECM Libra Financial Group and RHB Capital are involved in the flotation, said the second source.
Fernandes and officials with Tune were not available to comment.
Meanwhile, AirAsia’s long-haul arm, AirAsia X, recently hired CIMB, Malayan Banking and Credit Suisse Group AG for a $250 million IPO expected early next year.
The group is looking to list its Indonesia operations, Indonesia AirAsia, by the first quarter of next year in a deal that could raise up to $200 million.
The listing plans also come at a time when Fernandes is stepping down as the chief executive officer of the Malaysian-listed airline to focus on regional growth through Indonesia.
The group’s plan to buy up to 100 Airbus jets, potentially worth around $9 billion, is designed to fuel the growth of what is becoming a cluster of related airlines under Fernandes, who placed a record order for Airbus jets last year. With an operating fleet of more than 116 aircraft, AirAsia has ordered a total of 375 Airbus jets as part of dramatic expansion plans that include the acquisition of Indonesia’s Batavia Air.
AirAsia has said it will accelerate deliveries as rising demand helps it offset high fuel costs.
Not all analysts are convinced by AirAsia’s expansion plans.
Some local bankers say profits could be crimped by pressure from potential losses at start-up units in the Philippines and Japan and competition from new players such as Malaysia’s Malindo Airways next year. AirAsia’s shares have fallen 20.26 percent in the past three months.
AirAsia made a net operating profit of 130.94 million Malaysian ringgit ($42.64 million), excluding one-off items, in the second quarter this year, down slightly from the same quarter last year.
Net profit was boosted by a one-off gain of 1.16 billion ringgit following a share sale at its Thai unit.
Reuters..October 11, 2012
Budget carrier AirAsia is hoping for a smoother ride ahead after a turbulent week of trading.
The company’s market value shed hundreds of millions of ringgit last week on the news of a low-cost value carrier, Malindo Airways becoming a player in the region.
AirAsia’s shares dropped 5.3 percent to close at 3.02 ringgit on Wednesday, then dropped to as low as 2.83 ringgit by midday Thursday. The stock then regained some ground, closing on Friday at 3.10 ringgit.
This rapid shifts in price came amid news that Malindo Airways, which is 49-percent-owned by Indonesia’s Lion Group, will start operations in mid-2013.
AirAsia had a market value of 8.39 billion ringgit as of Thursday. It was among the most active stocks with a total of 102.15 million shares traded.
OSK Research analyst Ahmad Maghfur Usman said that the scale of Malindo Airways’ operations will grow and competition among airlines will intensify if the new entrant fulfils its pledge to price its fares as low — or even lower—than AirAsia’s.
He said Malindo Airways has an advantage in its cost structure because its new-generation Boeing B737-900s have a capacity of 220 seats compared to 180 seats on AirAsia’s aircraft.
Its costs will be more competitive as well, because maintenance, repairs and overhaul services will be performed by major shareholder and National Aerospace and Defense Industries subsidiary, Airod.
“Competition is good for consumers, further stimulating the demand for low-cost travel,” Maghfur said in a report.
Maybank Investment Bank analysts Wong Chew Hann and Chai Li Shin said AirAsia’s cost advantage has narrowed with the entry of Malindo Airways and this will intensify competition.
“Yields are set to decline, and profit contribution from AirAsia’s biggest market will recede,” they said.
They added that Malindo Airways scores higher marks on its value proposition, because it will offer bigger seats, free snacks, in-flight entertainment and a jetway for passengers.
OSK Research maintained its “buy” rating on AirAsia at a target price of 4.10 ringgit, while Maybank IB has placed the stock under review at a price of 3.36 ringgit.
“While we are confident of AirAsia’s strong business foundation and its ability to fend off competition ... we are concerned on the sustainability of its industry-leading profit margins,” Wong and Chai said.
“We maintain our earnings forecasts and target price, pending firm dates on when [Malindo Airways] operations will start and how many aircraft will be deployed.”
They also said that Malaysia Airports Holdings Berhad would be a primary beneficiary of the new joint-venture airline between NADI and Lion Group, which also operates Lion Air.
Malindo Airways would promote higher traffic volume, hence better earnings prospects for MAHB, they added.
“The additional traffic growth will translate to higher utilization rates and fuel profit growth at MAHB. Furthermore, Malindo Airways has publicly announced that they will use the jetways [at Kuala Lumpur International Airport 2], which is an additional revenue stream for MAHB,” they said.
KLI2, which is under construction, will be the low-cost carrier’s terminal.
The articles on this page are a weekly focus on Malaysian business provided by the Business Times desk of the New Straits Times in Kuala Lumpur.AirAsia Endures a Roller-Coaster Week...September 17, 2012
Last edited by jetjockey696; 11th Oct 2012 at 14:21.
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AirAsia’s Attempt to Buy Batavia Air Ends
AirAsia, the biggest budget carrier in Asia and Fersindo Nusaperkasa, its Indonesian partner, have scrapped plans to buy Indonesian carrier Batavia Air after the sides failed to reach an agreement, Dow Jones Newswires reported on Thursday, quoting an official at Batavia Air.
“We will continue to seek strategic partners to develop our business,” Batavia Air chief executive director Yudiawan Tansari told Dow Jones.
Jakarta Globe | October 12, 2012
“We will continue to seek strategic partners to develop our business,” Batavia Air chief executive director Yudiawan Tansari told Dow Jones.
Jakarta Globe | October 12, 2012
