AirAsia buys 76% in Indonesia's Batavia Air

AirAsia buys 76% in Indonesia's Batavia Air

  2012-07-26 17:53

KUALA LUMPUR, July 26 (Bernama) -- AirAsia and its Indonesian unit, AirAsia Indonesia, has acquired Indonesia's Batavia Air, a move that will boost the no-frills airlines' presence and network in the republic in a cash deal worth US$80 million or RM253 million.

AirAsia Chief Tan Sri Tony Fernandes said Batavia Air's acquisition fitted well to complement the budget carrier's international network, which was continuously growing.

"It's an extremely proud day for me. AirAsia and our partners in AirAsia Indonesia have acquired Batavia Air.

"It's a fantastic fit as Batavia is strong in domestic and we're strong at international. It's a big dream come true for me," Fernandes said in his latest posting on social networking site, Facebook.

In a statement issued by the company later, AirAsia said its wholly-owned subsidiary, AirAsia Investment Ltd, has signed an agreement with its partner, PT Fersindo Nusaperkasa, to acquire PT Metro Batavia, which operates Batavia Air and Aero Flyer Institute (AFI), an aviation training school.

The tripartite agreement was signed in Jakarta today between AAB, Fersindo and Metro Batavia.
The acquisition of 100 per cent interests in Metro Batavia by AAB and Fersindo will be executed in two stages, through acquisition of a majority 76.95 per cent stake and subsequently followed by the remaining 23.05 per cent held by its existing shareholders.

Batavia Air is an airline based in Jakarta and Surabaya. It operates domestic flights to 42 local destinations and six international services to Singapore. Its main base is Soekarno-Hatta International Airport in Jakarta.

This new acquisition will complement AirAsia's existing Indonesian operations, IAA, which has captured strong market share in Indonesia's international airline traffic, with an extensive and well-established domestic route network throughout the Indonesian archipelago.

The Batavia Air acquisition provides greater domestic connectivity and an extensive feeder network into IAA's existing hubs in Jakarta, Bandung, Denpasar, Medan and Surabaya.

Pursuant to the acquisition, Batavia Air and IAA will fly over 14 million passengers and serve 42 Indonesian and 12 international destinations.

Batavia Air's addition will provide AirAsia immediate access to an enlarged aircraft fleet, experienced pilots and flight crew and increasingly competitive slots at major Indonesian airports at a time when Indonesia's travel sector is experiencing double-digit growth on the back of rapidly growing consumer demand for air travel.

Malaysia's AirAsia buys Indonesia's Batavia Air

http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1215888/1/.html

JAKARTA: Malaysia-based AirAsia said Thursday it is paying $80 million in cash for Indonesia's Batavia Air, as the region's biggest budget carrier spreads its wings in Southeast Asia's largest economy.

"In accordance with Indonesian civil aviation ownership regulations, AAB will hold a 49 percent stake in Metro Batavia Group with the 51 percent majority held by its Indonesian partner, Fersindo," the group, AirAsia Berhad (AAB), said in a statement.

"The acquisition of 100 percent interest in Metro Batavia by AAB and Fersindo will be carried out in two stages, through acquisition of a majority 76.95 percent stake and subsequently followed by the remaining 23.05 percent held by its existing shareholders."

Acquisition is expected to be completed by the second quarter of next year, and is subject to regulatory approvals in Indonesia, it said.

"The total purchasing consideration for Metro Batavia Group is $80 million and will be settled in cash," the statement added.

AirAsia has been shoring up its presence in the region against a host of other competitors, including Lion Air, Indonesia's largest low cost carrier.

"The Batavia Air acquisition is a fantastic opportunity for AirAsia to accelerate our growth plans in one of the most exciting aviation markets in Asia and further underlines our belief in the growth potential of Indonesia's aviation sector," said Tony Fernandes, Group CEO and director of AAB.

Batavia Air is a largely domestic carrier with about 30 planes and a few international routes such as Jeddah, Singapore and Guangzhou.

It has been bouncing through financial turbulence recently, with the transportation ministry confirming the carrier was forced to return two leased Boeing 737 airliners to its owners after failing to pay overdue bills.

Demand for air travel in Indonesia, an archipelago of more than 17,000 islands with a growing middle class among its 240 million population, has been soaring.

Its domestic airlines carried more than 60 million passengers last year, and the Indonesia Air Carriers Association predicts a 52 percent increase in passenger numbers by 2015.

- AFP/al

Foreign Company Plans Budget Hotels

Foreign Company Plans Budget Hotels

By BERNIE CAHILES-MAGKILAT

July 17, 2012, 5:43pm

MANILA, Philippines — Bangkok-based Red Planet Hotels Limited, Asia’s emerging force in low- cost hotel development and operation, is investing as much as $70 million for the establishment of a total of 8 budget hotels in the Philippines to serve the demand for affordable but quality tourist accommodation facilities.

Red Planet Hotels Chief Executive Officer, Tim Hansing, told Business Bulletin over a phone interview, in time for the company’s announcement of its acquisition of 16.05 percent stake in Tune Hotels, which is owned by Tony Fernandes of the Malaysian airline Air Asia.

Its foray in the Philippines and buy-in into Tune Hotels came after Red Planet’s successful fund raising activity that generated $180 million.

According to Hansing, the $70- million investments would include the construction of four additional new hotels in the Philippines to be operational by next year. These new hotels are to be located in Cagayan de Oro, Quezon City, Ortigas and hopefully another hotel in the Mall of the Asia complex and another one in Iloilo City.

Red Planet is a major franchise holder of Tune Hotels for the Philippines and other ASEAN countries. It is owned by 66 individual shareholders, including some Filipinos and 25 percent owned by a Japanese group.

“As a franchise holder of Tune Hotels, we have the right to develop Tune Hotels in the Philippines, Thailand, Indonesia and China,” Hansing said.

Hansing, however, refused to divulge the value of its investment in Tune Hotels only to say it is in the tens of millions of dollars. He, however, said this would give them greater foreign exposure and financial muscle given the huge reach of Tune Hotels.

There are already four Red Planet Hotels under the brand of Tune Hotels operating in the country with a total of 700 rooms and employing 60 Filipinos. These Tune Hotels located in Ermita, Cebu and in Angeles, Pampanga and Makati, which opened its 215 hotel room yesterday. These hotels have an average occupancy rate of 75 percent. It has very affordable rooms for as low as P399 a night.
Once the three more Tune Hotels come on stream by next year, the company will have a total of about 1,100 rooms for its Philippine hotels.

“We are very, very bullish for the Philippines,” Hansing said citing the booming economy and the bustling tourism sector in the country and yet there is a lack in the supply of good quality low cost hotels.

“We are a hotel company and we have great belief in the Philippines. The problem is there is not enough low cost but quality hotels, so now is the time to build additional hotels,” said Hansing.
He also urged the Philippine government to develop more infrastructure projects like airports to further boost tourism.

The Tune Group has about 24 hotels, including 12 in Malaysia, with a total of 4,000 rooms. Its expansion in six other countries including UK, Australia, Qatar, UAE and India will add 6,000 new rooms.

Tune Hotels, which is an essential investor in Air Asia, has strategically positioned its hotel chain to the growing reach of the Malaysian airline.

On its 16.05 percent stake in Tune Hotels, Hansing said the deal cements Red Planet Hotels as the third largest investor in Tune Hotels with 9,975,038 shares, providing further value to Red Planet Hotel’s shareholders.

This investment also results in Red Planet Hotels taking up a seat on the board of directors, enabling Red Planet Hotels to be actively involved in the future of one of the world’s fastest growing hospitality concerns.

While the value of the deal remains undisclosed it is a “significant multi-million dollar transaction” and the largest single corporate investment Red Planet Hotels has clinched in its two-year history.
The investment in Tune Hotels comes at a time when Red Planet Hotels’ latest round of fund raising was over subscribed and the company now has $180 million of hotel projects (containing 3,191 rooms) either operating or under construction in Asia.

Hansing, said the investment represented Red Planet Hotel’s pledge to the brand and the founding members’ vision for the Tune Hotels concept.

“This significant investment and commitment to the Tune Hotels brand is indicative of Red Planet Hotels’ well-balanced long-term development programme and provides tremendous value growth to our existing shareholders,” Hansing said.

“As we move towards becoming a major owner and operator of Tune Hotels properties, this investment and endorsement of Tune’s board and management allows Red Planet Hotels to participate and contribute constructively and meaningfully for the benefit of both companies.
“Each will reap significant rewards through our investment and I am delighted that Red Planet Hotels’ commitment to Tune Hotels has resulted in us being invited to join its board.”

Tune Hotels has quickly established itself as the leading player in the low cost hotel space just as Air Asia did in the low cost airline industry.

Established in 2007, currently there are 24Tune Hotels operating 3,859 rooms globally.
There is a confirmed additional pipeline of 38 more hotels with 10,106 rooms, including the first hotels in India, Scotland, Australia and Saudi Arabia along with additional properties in Thailand, Indonesia, the Philippines, Malaysia and England.

By the end of 2012, Red Planet Hotels will have 10 operating hotels with 1,623rooms in Thailand, the Philippines and Indonesia.

This month, it opened the first Tune Hotel in Jakarta, Indonesia (168 rooms) and a fourth in the Philippines in Makati (215 rooms).

Later this year, Red Planet Hotels will open a Tune hotel in Asoke, Bangkok (130 rooms - September), Pekanbaru, Sumatra (143 rooms - December), and Patong, Phuket (150 rooms - December).

Red Planet Hotels is exploring closer levels of co-operation with Tune Hotels across various platforms in the near future in a sign of its commitment to each other’s goals in the low cost hotel sector.

Tune Hotels to open in eight Indonesian cities by 2013

Nurfika Osman, The Jakarta Post, Jakarta | Business | Wed, July 18 2012, 9:25 AM

Red Planet Hotels Limited, a partner of tunehotels.com, is set to open eight budget hotels across the country by 2013 to capture growing market demand.

Red Planet CEO Timothy Hansing said the company had invested US$90 million in Indonesia alone to commit to entering the market.

“We see the Indonesian market is growing very rapidly at the moment. When the economy grows, people are doing business, traveling a lot, and certainly they need accommodations. These are the rapid demands of the economy that we would like to capture,” Hansing told The Jakarta Post.

He said the company had recently opened its first hotel on (1) Jl. KH Samanhudi, Pasar Baru, Central Jakarta on July 12, which had 168 rooms.

“We are very glad because its occupancy rate could reach 100 percent during the opening,”
Hansing said.

The company’s next hotel opening will be in (2) Pekanbaru, Riau, on Dec. 10, which will have 143 rooms.

Six more hotels are slated for next year, in (3) Makassar, South Sulawesi; (4) Surakarta, Central Java; (5) Surabaya, East Java; (6) Tangerang, Banten; (7) Bekasi, West Java; and (8) Palembang, South Sumatra.

Red Planet is an asset owning company that operates its own hotels under a franchise agreement from tunehotels.com. Tune Hotels manages at least 25 hotels in five countries: Indonesia, Thailand, the Philippines, Malaysia and the UK. Red Planet owns the assets of the hotels in the three Southeast Asian countries.

Hansing said that in the three Southeast Asian countries alone, by 2012, Red Planet would have 10
hotels with 1,623 rooms.

He said that he was not afraid of competing with existing chain players that had expanded their businesses in Indonesia, such as Accor International, Aston, and the Kompas Group’s Santika Hotel and Amaris Hotel, because the demand remained strong.

As a comparison, a standard double room in an Amaris Hotel in Juanda in Central Jakarta would cost the guest around Rp 370,000 (US$39.22) per night, including a free breakfast for two people.

A double room in Tune Hotel in Pasar Baru, Central Jakarta, would cost two guests a basic rate of
Rp 150,000 without any amenities. Guests can choose to add amenities individually or by package. As an example, a package of 12-hour air conditioning, 24-hour TV and WiFi, towels and toiletries will cost Rp 99,000 per night, making the total price about Rp 250,000. The basic price can vary, however. It can be as much as Rp 258,000 or as little as Rp 55,000.

Tunes Hotels are strongly associated with the Malaysian-based budget airline AirAsia, which has built a strong presence among budget travelers, not only in Indonesia, but also in Asia and Europe. Hansing said the AirAsia brand gave Red Planet a competitive advantage.

As of today, Red Planet Hotels Limited has invested a 16.05 percent stake in the rapidly expanding Tune Hotels operation as both companies seek to grow the booming business of a low-cost hotel brand.

The largest shareholder in Tune Hotels is Tony Fernandes, the founder of AirAsia.

Red Planet now has $180 million worth of hotel projects boasting 3,191 rooms that either operate or are under construction in Asia.

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