AirAsia plans IPO and more destinations next year

Nurfika Osman, The Jakarta Post, Jakarta | Business | Thu, November 29 2012, 11:37 AM

 

Budget carrier Indonesia AirAsia (IAA) is set to further expand its business next year by offering more domestic and international routes from its new hub in Makassar, South Sulawesi, as well as it’s upcoming initial public offering (IPO).

IAA president director Dharmadi said the airline would connect Makassar with major cities across the country and Southeast Asia including Jakarta; Denpasar, Bali; Surabaya, East Java; Balikpapan, East Kalimantan; Kuala Lumpur and Kota Kinabalu, Malaysia; and Singapore.

“We decided to add more routes from Makassar because the city has a number of flight slots, which
gives us room to grow. It is also an emerging market for the aviation industry in the east,” Dharmadi said in Jakarta on Wednesday on the sidelines of IAA 8th anniversary celebrations.

He said that he had met with South Sulawesi Governor Syahrul Yasin Limpo, who gave the company’s plan a lot of support.

“The governor is very enthusiastic about our plan because he plans to make Makassar the aviation
center of the eastern part of Indonesia. There is an excellent opportunity to develop human resources from this city and connect it with more places in the future such as the Philippines and Hong Kong,” he continued.

In order to support the expansion, IAA will take delivery of 10 Airbus A320s throughout 2013, which will increase its fleet to 32 aircraft.

By operating 32 aircraft, the company expects to carry 8 million passengers next year.

In addition, he said that IAA is going to carry out the IPO in the third quarter of 2013.

He declined to provide further details of the plan, such as the number of shares that they would float on Indonesia Stock Exchange (IDX) and how much money they would raise from the IPO, but he said that they have appointed the underwriter.

“I cannot give you details of the IPO plan right now but we have appointed the underwriter,” he said, refusing to mention who the underwriter was.

He said that “going public” was not merely about raising funds but rather to help the company strengthen its system of accountability and transparency.

Moreover, he said that IAA will operate 70 aircraft over the next five years in order to tap into the country’s growing demand in the leisure and business travel market.

According to data from the Transportation Ministry, the number of airline passengers in Indonesia reached 68.19 million last year, a 16.7 percent increase from 2010 of 58.39 million.

IAA became the strongest international player in 2011, carrying 3.38 million passengers on international routes, or 41.58 percent of the international market share, comparably, it carried only 181,200 passengers on domestic routes, 3 percent of the domestic share.

The airline has carried 5.35 million passengers for the year to date and it expects to reach 6 million passengers by the end of this year. In July this year, PT Fersindo Nusaperkasa, the owner of a 51 percent stake at IAA and the Malaysian based low-cost carrier AirAsia Berhad signed a memorandum of understanding (MoU) with PT Metro Batavia, the owner of Batavia Air, to acquire the domestic carrier.

The acquisition was a move that was expected to strengthen AirAsia’s foothold in the fiercely competitive environment facing low-cost airlines in Indonesia.

However, Fersindo and AirAsia Berhad announced the cancellation of its plan to acquire Batavia Air in mid October, saying the deal “poses many risks” and “may prompt concerns” among the Malaysia-based company’s shareholders.

http://biz.thestar.com.my/news/story.asp?file=/2012/11/24/business/12362880&sec=business

Analysts surprised by AirAsia’s fleet expansion plan

By WONG WEI-SHEN
weishen.wong@thestar.com.my

PETALING JAYA: Low-cost carrier AirAsia Bhd is coming out with gloves off as the airline fights to retain market share in Malaysia and expand in anticipation of the open skies policy in 2015.

The open skies policy would allow travellers choice where travelling within Asean is concerned.

However, analysts noted that airlines operating in Asean would have to up their ante to fight for market space. AirAsia is among those gearing up their capacity to compete against other airlines.

Analysts were surprised by AirAsia's commitment to take delivery of 36 planes next year, 15 more than what it took up this year. The expansion represents a group fleet expansion of 30%.

“AirAsia unveiled its pre-emptive attack on Lion Air's plans to enter Malaysia in mid-March 2013 by starting Malindo Airways,” CIMB Investment Bank Bhd analyst Raymond Yap said.

During a quarterly analyst conference call in conjunction with the release of AirAsia's financial results for the third quarter ended Sept 30, the company said the local operations would take up 10 planes while the Thai and Indonesian operations would take nine planes each. AirAsia Japan would take five plane deliveries while the remaining three planes will go to AirAsia Philippines.

Yap said the expansion for the local operations was double the previous guidance for a five-plane expansion.

The expansion for next year would be the highest ever in AirAsia's history in terms of the number of aircrafts. “While it is a strategic long-term move against Lion Air's regional ambitions, it could cause yields to deflate faster than we had anticipated,” Yap said.

Of the 36 planes to be delivered, 23 would be from Airbus. Besides these orders, the company has also decided to enter the market for 13 additional leases from third-party lessors on five-year terms.

But analysts noted that the aggressive pre-emptive strike against Lion Air could cause negative returns in the near-term.

Yap has cut AirAsia's earnings per share forecasts for 2013 and 2014 to factor in this aggressive stance.

“We cut out core EPS forecasts by 14% for 2012,” he said. However, Yap has retained target price-earnings multiples of nine times with the target price cut to RM3 from RM3.50 previously.

Credit Suisse Group AG analyst Annuar Aziz said in a previous report that the accelerated roll out of aircraft locally was a good defensive measure against the start of Malindo Airways' operations here in March next year.

He expects AirAsia to be able to endure the challenge.

On the onslaught of the open skies policy, AirAsia had announced that it would order 100 more aircraft to prepare itself. Malaysia Airlines was also preparing strategies to stay relevant in the current and near-future environment.

AirAsia granted 6 months to operate flights

Posted on 23 November 2012 - 05:36am

Presenna Nambiar
sunbiz@thesundaily.com

PETALING JAYA (Nov 23, 2012): AirAsia Bhd has been granted with an air operator's certificate (AOC) by the Department of Civil Aviation (DCA) to fly for another five months -- instead of a two-year period -- for not meeting regulatory standards, said sources.
The current AOC is valid until April 2013.
Sources told SunBiz that AirAsia had only obtained a six-month AOC -- an approval granted from the DCA to an aircraft operator to allow it to use aircraft for commercial purposes -- after periodical audit findings by DCA showed shortcomings in AirAsia's flight operations procedures and practices including flawed communications between flight operations and pilots, an outdated manual and flight operations not in keeping with the manual.
The six-month period allows for AirAsia to work with the DCA to bring its flight operations procedures and practices up to mark.
It is also understood that AirAsia's head for flight operations has been changed due to the action.
Three key posts in an airline are nominated with the approval of the DCA, namely the head for flight operations, engineering maintenance system and crew training.
"The fact that they have not grounded AirAsia aircraft shows that it's not a serious safety issue, but this action still serves as a warning," one source told SunBiz.
Scheduled commercial airlines based in Malaysia are awarded two-year renewals of AOC by DCA.
In other markets, depending on the track record of the airline, AOCs can be valid for up to five years before a renewal is due.
While the audit is a biennial affair, the DCA conducts inspections on airlines at least once a year.
According to another source, a two-year renewal is given if airlines meet standards set by the regulator. Otherwise they are given a period of time, depending on the issue, to comply before a renewal of AOC is given, or it is revoked entirely.
In the event of a withdrawal of an AOC, the airline can work to meet standards set and re-apply for an AOC which will have to be approved by the Cabinet.
AirAsia and DCA officials did not respond to questions sent via e-mail, as at press time.
An industry observer said it is unlikely that AirAsia will let the situation progress to an outright withdrawal of AirAsia's AOC, ultimately grounding its flights.
"They (AirAsia) will definitely address whatever issues DCA have and make sure they bring in the right people and fire the wrong people, because too much is at stake."
He added that while the action taken by DCA is unlikely to have any financial impact on AirAsia as a company, it may impact its reputation as an airline and its ability to secure the best deals for financing in the future.

Tune Hotel to check in at klia2 end of next year

TUNE Hotels Group plans to close its existing budget hotel in the present low-cost carrier terminal (LCCT) in Sepang, once it opens a new Tune Hotel at  KLIA2 in Sepang, December next year.

Commercial director David Lusteaux said the new hotel at KLIA2 will be connected with the terminal KLIA2.
"We will be opening a brand new hotel (at KLIA2) with 400 rooms and the existing Sepang's Tune Hotel will be in operation until the new hotel opens its doors," he told reporters at the hotel group's fifth anniversary celebrations here today.

Lusteaux said besides KLIA2, the group also planned to open another 20 Tune Hotels next year in India, Australia, as well as in the United Kingdom, Thailand, Philippines and Indonesia.
He also said in line with its fifth anniversary, the company had embarked on a new design and brand, to attract the younger crowd.

"Currently, half of the four million guests come from younger group. We want to grow this figure to at least between 60 per cent and 70 per cent from the current 50 per cent," he added.

The company also aims to double its guests next year, from the current four million, by doubling the number of rooms in its hotels.

Lusteaux said its first landmark hotel located in downtown Kuala Lumpur was the second to be refreshed and given a "make-over", after its Ipoh branch.

The budget hotel chain now has 25 hotels operating in five countries, namely Malaysia, Indonesia, the Philippines, Thailand and the UK.

Tune Hotels is part of Tune Group, which is co-founded by Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, who are the group chief executive and deputy group chief executive respectively for budget airline, AirAsia Bhd. Bernama
http://www.btimes.com.my/Current_News/BTIMES/articles/16TUNE/Article/#ixzz2CSQmhwk0

AirAsia Japan Facebook : 100 K 'Likes"

ERL extension to KLIA2 to be completed end-March 2013

SEPANG, Nov 6 — High-speed train service operator Express Rail Link (ERL) expects the 2.14 km line extension from Kuala Lumpur International Airport (KLIA) to Kuala Lumpur International Airport 2 (KLIA2) to be completed by end-March next year.
“The project is 73.33 per cent complete as of October 31 this year,” its Chief Executive Officer Noormah Mohd Noor told a media briefing on the ERL Extension to KLIA2 here today.
“The commercial services would commence together with KLIA2 in May next year,” she added.
ERL expects the new line extension to increase its passengers by 40 per cent, translating into 60 per cent additional revenue, yearly.
It currently handles over 5.3 million passengers. — Bernama
====================================================
RM35 for KL Sentral - KLIA2 with ERL

Tuesday, November 06, 2012 - 19:42

by Hamzah Nazari

Location:

SEPANG

WHEN ‘gateway@klia2’ begins operations on May 1 of next year, travellers taking the Express Rail Link (ERL) to KLIA2 to, and from KL Sentral will need to pay RM35, which is the same amount as the journey to, or from KLIA.

However, those travelling from KLIA to KLIA2, the replacement airport for the LCCT, will have to pay RM2 for the use of the transportation hub.

Although it is expected to be completed in March 2013, ‘gateway@klia2’, formerly known as the Integrated Transport Hub, will only provide commercial services when KLIA2 is ready.

Express Rail Link Sdn Bhd chief executive officer Noormah Mohd Noor said the ERL extension was located 2.2km from the existing main terminal building in KLIA.

“In terms of our scope of work, it includes construction of the dual track standard gauge, 2.2km, so in total we built 4.4km and system work which includes the Overhead Catenary Line (OCL), signalling, telecommunications, Automated Train Protection System, Passenger Information display System and Automated Fare Collection System,” said Noormah.

She added that they were also involved in the relocation of the carpark and some of the other utilities.

“The actual progress now is 73.3 per cent versus 73.6 per cent targeted so everything is well."

She said 95 per cent of the prep work was completed and they are
currently carrying out the final tamping and stringing of the OCL which is expected to be completed on December 14
and energised on December 18.

She said they were also making changes to ERL operations within KLIA.

“Currently the KLIA transit stops at the station that is near the domestic arrival and express is on the main terminal building.”

“With the opening of KLIA2, both KLIA Express and KLIA Transit stations will be merged on the same platform as per the current KLIA Express platform,” said Noormah.

She said the changes would improve the frequency of the trains and make it less confusing for passengers.

In terms of timing, she said KLIA Express would take a total of 33 minutes to reach KLIA2 from KL Sentral while KLIA Transit would take 39 minutes due to the four quick stops it makes on the way.

Noormah was speaking to the press after taking SPAD chairman Tan Sri Syed Hamid Albar on a tour of the 'gateway@klia2' construction site.