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AirAsia seen to grow 80% a year


BUDGET airline AirAsia will be able to grow its passenger numbers, fleet size and net earnings by about 80% a year over the next three years, an analyst says.

The airline, including 49%-owned Thai AirAsia, carried 2.8 million passengers in its financial year ended June 30 (FY04). Its passenger volume is expected to triple to 8.5 million in FY05 and to rise further to 13.5 million in FY06.

This extraordinary rate of growth is attributed to a boom in low-cost regional air travel. The buoyant business condition arises from rising incomes and affordable air travel in the region.

A high growth rate will lift valuations for AirAsia's initial public offering (IPO) exercise and, later, its share price. The company announced last week it received approval from the authorities for a listing on Bursa Malaysia. The airline will make a public issue of 700 million shares of 10 sen each. It is expected to disclose the offer price at an underwriting ceremony today.

In the past, the demand for air travel was largely determined by economic growth and income levels. This has changed in recent years, as global demand is now also being driven by budget prices. Low-cost carriers (LCCs) like AirAsia have provided this impetus for demand.

To cater for the increasing passenger traffic, AirAsia, together with ThaiAsia, is expected to expand its fleet from 18 aircraft presently to 54 by FY07.

The group's net profit is estimated at RM50mil in the current FY05. This is believed to be quite a close estimate as the group has hedged the bulk of its fuel requirements until the end of this financial year.

Going forward, the analyst forecasts AirAsia to be able to raise its earnings to RM300mil by FY07 if jet fuel prices drop from the current US$55 a barrel to around US$38, which he believes is a more sustainable price.

On the basis of a forecast of AirAsia's earnings for the 2005 calendar year and a price earnings multiple (PE) of 22 times, the airline would be worth RM4bil, he says. He used this rich PE to reflect the growth stage the company is in. The airline is expected to price its IPO to value the company at RM3bil, he adds.

It is a particular concern to some observers that a number of other budget airlines have emerged in the region. AirAsia will be able to hold its own, the analyst says, as it is believed to have the lowest cost structure among these LCCs. Hence, AirAsia is able to price its seats lower than those of these competitors.
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Published October 12, 2004

Malaysia's AirAsia to raise US$211m in IPO

KUALA LUMPUR - Malaysian low-cost airline AirAsia has unveiled plans to raise 800 million ringgit ( US$211 million) in an initial share offer to help fund a fleet expansion.

AirAsia wants to increase its fleet nearly fourfold and challenge Asia's established airlines on lucrative routes.

Chief Executive Tony Fernandes said the carrier, which started just about three years ago, would sell a total of 701 million new shares, 80 per cent going to institutions and the rest to retail investors.

Mr Fernandes has said the Kuala Lumpur-based AirAsia, which currently owns 22 planes, needs up to 80 more over the next four to eight years as it expands to more destinations across Asia.

The company's joint venture with Thailand's Shin Corp, called Thai AirAsia, plans to fly to Kunming, China starting December from Bangkok.

This would make AirAsia the first budget carrier to break into China's previously tightly controlled market.

On the proposed IPO, Mr Fernandes said the carrier would offer shares to retail investors at an indicative price of 1.40 ringgit a share.

Institutional investors normally pay a premium to the final retail price.

The IPO prospectus is to be issued this month and the shares are scheduled to list in November.

Since its launch, AirAsia has severely cut into flagship carrier Malaysia Airlines' business in the short-flight regional sector.

AirAsia carried 1.8 million passengers in 2003 and expects 3.2 million passengers this year, rising to 6 million in 2005.

AirAsia's planned listing will likely be a barometer of investor interest in aviation while the industry grapples with surging fuel prices and intense competition among airlines.
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Some stealing infos from my friend that works in Airasia jakarta, next year Air Asia Indonesia will start to operate, consists of 14 Boeing 737s, the shares 50% owned by Sampoerna (a leading cigarretes comp) and the rest Airasia.

The routes are mainly domestic.

Airasia is now serving 5 cities in Indonesia. Jakarta, Surabaya, Bandung, Medan, Bali and soon padang in november.

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AirAsia buys Indonesian airline: Report

KUALA LUMPUR (AFP): Malaysia's budget carrier AirAsia has acquired a private airline in Indonesia and will team up with a local partner to launch new flights to tap into Southeast Asia's most populous nation, a report said on Sunday.

AirAsia bought PT AWAir Internasional for a token two dollars, business weekly The Edge quoted sources as saying.

It plans to tie-up with an unidentified partner to launch a no-frills airline in a set-up similar to that of Thai AirAsia, where Thai media and telecommunications group Shin Corp. holds acontrolling 51 percent stake, the sources said.

AirAsia officials were not available for comment but the company's executive director Kamarudin Meranum last week told the New Straits Times daily that the airline was waiting for the Indonesian government to issue a license to allow it to set up a budget airline.

The Edge said AWAir began operations in June 2000 but suspended them two years later because of fierce competition from some 50 airlines now servicing domestic routes following the deregulation of the aviation sector.

It was unclear if AWAir has the rights to fly international routes but its start-up mirrored AirAsia's beginnings in Malaysia, when private firm Tune Air took over all of AirAsia's 40 million ringgit (US$10.5 million) in debts and two aircraft for a token one ringgit in 2001.

After revamping the airline into a low-cost model, AirAsia began making profits in seven months and now flies to 30 destinations in Malaysia and the region, including Singapore, Thailand, Indonesia and Macau. It hopes to fly to China by the year-end.

The carrier last week said it expected to raise some 800 million ringgit in next month's initial public offering, billed as Malaysia's largest listing this year, to fund the acquisition of 80 new aircraft.

For its financial year to June 2005, AirAsia expects net profit to surge threefold to 160 million ringgit on a turnover of 700 million ringgit, The Edge said. (**)
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Hmm...seem like Airasia's JB-KL route is rather popular......they've raised the regular fares to RM65.99 (RM84.99 including tax)..........
20 October 2004

AirAsia eyes Australia with stake in Indonesian carrier
KUALA LUMPUR : Malaysia's budget carrier AirAsia has announced plans to fly to Australia with the acquisition of a private airline in Indonesia with the launch of its initial public offering (IPO).

Pahamin Rajab, AirAsia chairman, said Jakarta would be the hub for the latest budget carrier's joint-venture after it bought PT AWAir Internasional for a token two dollars.

"We will be flying domestic routes in Indonesia and beyond. Our planes will go to places with a flying time of three and a half hours. Australia is within that flying time," he told reporters.

In its prospectus, AirAsia forecast a net profit of sme 160 million ringgit (42.1 million US dollars) for the year to June 2005.

The airline, which is offering the public shares at 1.40 ringgit each or nearly 19 times its expected earnings per share of 7.47 sen (cents), will list November 22 after Malaysia's biggest IPO this year.

Pahamin said approvals from the Indonesian government were expected to be concluded by year-end. AirAsia would hold a 49 percent stake in the business and an Indonesian partner 51 percent.

It would be similar to that of Thai AirAsia, where Thai media and telecommunications group Shin Corp. holds a controlling 51 percent stake.

Tony Fernandes, chief executive officer, in a recorded message at the IPO launch, said the Indonesian carrier would begin service at the latest in early 2005.

"We hope the operation can start by the end of the year or early next year. It is a massive market," he said.

Highlighting AirAsia's growth prospects, Fernandes said AirAsia hopes to set up similar joint ventures in China and the Philippines.

"We are in negotiations with people in China and the Philippines," he said.

AirAsia currently flies to Macau, the former Portuguese colony in southern China, from Bangkok and is expected to launch more flights to the area and India.

AirAsia, which has a fleet of 24 Boeing 737 aircraft, currently operates 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations.

Rising oil prices do not seem to worry the carrier, which said it has hedged its needs up to next June.

"We have come a long way, we do not have any specific fear," Fernandes said.

AirAsia said it had hedged fuel at 42 dollars per barrel for the six months to December and at 36.96 dollars for the second half to June 2005.

Kamarudin Meranum, executive director, told AFP that the low cost carrier does not plan to impose fuel surcharge.

"We will try to avoid that," he said while Pahamin noted the carrier would try to expand load factors and increase revenue.

AirAsia's IPO involves some 700 million shares, of which 583.76 million are new and 116.75 million are existing shares offered by its major shareholders.

The public portion of the IPO comprises 140.1 million shares, tentatively priced at 1.40 ringgit a share, while the institutional portion of 560.41 million shares will be price through a book-building exercise.

Based on the indicative price of 1.40 ringgit each, Air Asia said it will raise gross proceeds of 864.01 million ringgit.

AirAsia plans to use the funds from the IPO to increase its fleet to 80 aircraft with Boeing and Airbus competing for the business.

Kamarudin said AirAsia had conducted a preliminary study on both and a decision could be made early 2005 after it receives a formal proposal from the two manufacturers. - AFP

Copyright © 2004 Agence France Presse. All rights reserved.
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Damn, you beat me to it ! I was about to post that news :lol:

Anyway, good news, I thought the HUB will be Bali, since Australian visited Bali very often, but this is maybe because next year Jakarta will build terminal 4 for budget carrier.

Business Times - 28 Oct 2004

Oil, competition could hit AirAsia shares


SHARES of Malaysian low-cost carrier AirAsia could be weighed down by sky-high fuel prices and the abundance of cut-throat competition, players say.

Analysts in Kuala Lumpur have pegged the 12-month price target for AirAsia's shares at between RM1.40 and RM1.48 - barely 6 per cent above the indicative bookbuilding offer price of RM1.40.

Mayban Securities has a target of RM1.48 for the stock, while OSK Research sees it at RM1.40 to RM1.48. Most other brokers are within this range.

New Straits Times yesterday quoted Malaysian brokers as saying at the indicative retail offer price, the shares are fairly valued.

'For 2006, based on the offer price of RM1.40, Air Asia's shares are being offered at a 2006 price-earnings ratio of 16.2 times, based on fully-diluted EPS of 8.7 sen,' Mayban Securities said in a research note. 'The valuations are also relatively in line with regional peers, which are currently trading at a prospective 2006 PER of 15.1 times.'

AirAsia is offering 700.5 million ordinary shares of 10 sen each, of which 116.8 million are set aside for the public and 560.4 million have been offered to institutional investors in a bookbuilding exercise. The rest have been distributed to directors and business associates. The bookrunners for the institutional offering are RHB Sakura Merchant Bankers, Credit Suisse First Boston (Hong Kong) and ECM Libra Securities. The offer closes today.

The carrier was founded by Tony Fernandes, whose Tune Air took over Air Asia's debts of RM40 million and two aircraft for a token RM1 in 2001. Since then, the company has grown rapidly. It now has 24 aircraft doing 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations.

The IPO will see Tune Air's stake fall to 44.8 per cent from 64.6 per cent, while other major shareholders will collectively own 14.8 per cent.

But the big concern for most analysts is rising fuel costs. AirAsia has projected net earnings of RM159.9 million (S$70.4 million) for its financial year ending June 2005 - but this projection is based on oil prices of US$51 per barrel and US$45 per barrel for the six months to December 2004 and June 2005 respectively. The oil price has soared 63 per cent this year and now stands at a record US$62 a barrel. Fuel now accounts for more than 40 per cent of AirAsia's total costs, up from about 30 per cent earlier this year.

'It's tough to see how they are going to meet the estimates at the rate fuel prices are rising,' said Shukor Yusoff of S&P MarketScope.

Mr Fernandes has previously said the airline is 80 per cent hedged - though he did not say at what price.

There is also concern that after enjoying a strong run in the past two years, AirAsia is now up against strong competitors with deep pockets such as Singapore Airlines associate Tiger Airways and Qantas associate Jetstar Asia.

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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November 01, 2004

AirAsia may have to trim fleet plans

IPO proceeds fell far short of target: analysts

KUALA LUMPUR - AirAsia's expansion plans may be hindered after the discount carrier failed to raise as much money as it had sought in an initial share sale, fund managers said.

AirAsia raised RM863 million (S$377.8 million) in its share sale last week, less than its RM1 billion target. Institutional investors paid RM1.25 a share, the company said in a statement after the market closed last Friday. Individuals bought the shares at RM1.16 each.

"They may have to readjust their plane leases," said Mr Raymond Tang, who helps to manage the equivalent of US$1.1 billion (S$1.8 billion) as chief investment officer at Commerce Asset Fund Managers in Kuala Lumpur. "It might hinder plans to buy planes."

AirAsia executive director Kamarudin Meranun declined to comment.

AirAsia was trying to tap investors for funds as record oil prices have been driving the costs of jet fuel higher and at a time when as many as nine discount airlines plan to start operations. AirAsia wants to expand its fleet and add regional hubs in Indonesia and China.

AirAsia, which needs more, and more efficient, aircraft to help save on fuel costs, plans to buy 12 aircraft from Boeing Co, increasing its fleet to 36 by June and then adding as many as 80 planes starting the following year.

"It might put them back two or three planes, but if you're talking about 20 or 30, it's just a small amount," said Mr Teoh Kok Lin, managing director of Singular Asset Management Sdn.

The airline sold 700.5 million shares, around a third of its enlarged share capital, and is scheduled to list on the main board of Malaysia's Exchange on Nov 22.

"We still got a price-to-earnings ratio of 18.5, higher than any other low-cost carrier," chief executive Tony Fernandes said in a telephone text message earlier.

He could not be reached yesterday to comment on whether the smaller-than-planned share sale would affect expansion plans.

The carrier said on Oct 20 in its sale document that oil prices will rise to around 43 per cent of its operating expenses in its fiscal year ending June, 2005, from around a third of costs during its first three years of operation.

"They may have less available cash in hand now, but it should be enough to buy the planes they need," said Mr Chong Sui San, who helps to manage the equivalent of US$368 million at Allianz General Insurance Malaysia Bhd. - Bloomberg

Copyright © Singapore Press Holdings, 2004. All rights reserved.
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03 November 2004
Malaysian budget carrier AirAsia's expansion plan on track: official

KUALA LUMPUR : Malaysian budget carrier AirAsia's plan to acquire some 80 new aircraft is on track despite its initial public offering (IPO) raising less funds than first indicated, a senior official said Wednesday.

AirAsia set the price for the institutional tranche of its IPO at RM1.25 per share and the retail tranche at RM1.16, well below the indicative price of RM1.40.

AirAsia Executive Director Kamarudin Meranum told AFP that the issue price for the institutional and retail tranches was "more than enough to fulfill our expansion plan and to build up our war chest.

"The board believes that the minimum value of the company is 1.20 ringgit (per share), in line with the IPO price," he said, when asked to comment on fears that the carrier's expansion plans may suffer.

AirAsia said previously that it planned to use the funds from the IPO to increase its fleet to 80 aircraft.

It currently operates a fleet of 24 Boeing 737 aircraft on some 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations.

Analysts had expressed some concern that the lower than expected price for the IPO could have hurt the fleet expansion plan but Kamarudin said AirAsia only needed a minimum of RM1.20 to meet its financing needs.

"If we had put the indicative price lower than 1.40 ringgit, it may have been lower (still) so we put it at 1.40 and we got 1.20. We are happy. Our wings are intact. There is no need to reschedule anything," he said.

Kamarudin said the carrier was happy with the strong response to the IPO and the investor profile.

The institutional tranche was 3.5 times subscribed and the public tranche, the largest ever for a Malaysian IPO, was 1.5 times subscribed, with the IPO raising some RM717.4 million.

The stock will list on November 22.

Asked about the planned acquisition of an Indonesian carrier, Kamarudin: "I am flying to Jakarta today. The plan is on track. We hope to conclude the deal by year-end or the latest in the new year." - AFP

Copyright © 2004 Agence France Presse. All rights reserved.
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Time is GMT + 8 hours
Posted: 07 November 2004 2349 hrs

AirAsia plane skids off runway at Kota Kinabalu airport
KOTA KINABALU, Malaysia : A Boeing 737 plane owned by budget airline, AirAsia, with 111 passengers and five crew members on board, skidded while landing on Sunday, forcing the Kota Kinabalu International Airport (KKIA) to be closed temporarily.

Department of Civil Aviation Director-General Kok Soo Choon confirmed that the incident took place at about 5.50pm during heavy rain.

"So far, no passenger was reported injured...everyone is safe, but we have to close the runway temporarily," he told Bernama news agency.

Following the temporary closure, five flights scheduled for take-off were cancelled while five in-coming flights from Kuala Lumpur were diverted to Sandakan Airport.

In Kuala Lumpur, AirAsia said due to heavy rain and bad weather, its aircraft bound for Kota Kinabalu from Kuala Lumpur skidded slightly off the runway after it touched down at Terminal Two of the KKIA.

"While evacuating the aircraft, two of the passengers sustained minor injuries. AirAsia's staff responded instantly to send the passengers for immediate medical attention," it said.

AirAsia said all other passengers were fine.

Flight AK104 had 110 passengers, one infant and five crew members on board. - CNA

Copyright © 2004 MCN International Pte Ltd
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Business Times - 09 Nov 2004

Runway mishap unlikely to hurt AirAsia's IPO prospects


AIRASIA is likely to have a smooth debut on Bursa Malaysia later this month despite a mishap that could have been potentially more serious last Sunday.

The airline's skid off the Kota Kinabalu International Airport runway on Sunday evening is not likely to mar investor sentiments before its debut, scheduled on Nov 22.

Analysts contacted by BT said that the airline's little mishap was 'part and parcel of operations' and would not affect its impending listing.

In the Sunday incident, an AirAsia plane with 110 passengers on board skidded off the runway at the East Malaysian airport, resulting in the evacuation of passengers via emergency chutes.

Two passengers and the airline's two pilots reportedly suffered minor injuries. The Department of Civil Aviation has closed the airport and investigations are underway on the cause of the skid.

An analyst who declined to be identified said it was unrealistic to expect any airline to be incident-free, and that so long as it was an isolated incident, it was unlikely to rain on AirAsia's listing debut parade.

The incident, however, may train the spotlight on AirAsia's quick turnaround time - a point of pride for the low cost carrier.

Said an analyst from Mayban Research: 'The incident will have minimal impact on its listing,' but he added there could be questions on whether the airline's planes should be more thoroughly inspected or maintained. The first budget airline to list, AirAsia will raise RM717.4 million (S$312 million) from its listing exercise.

It had priced the institutional portion of its initial public offering at RM1.25 per share and the retail portion at RM1.16, well below its earlier indicated price of RM1.40.

With a current fleet of 24 Boeing 737 aircraft, AirAsia plans to use the IPO proceeds to increase its fleet to 80 aircraft.

While its first mishap could have been perhaps better timed, AirAsia can take cheer from an important area of its operations: jet fuel prices.

'Jet fuel prices have come down substantially and as far as investors are concerned, the timing of its listing is quite good,' added the analyst.

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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Business Times - 09 Nov 2004

Airbus set to win US$5.2b AirAsia order: report

(PARIS) European aircraft maker Airbus is poised to win a US$5.2 billion order from Malaysia's AirAsia for its A320 short-haul aircraft, pushing out US rival Boeing who had previously been the budget airline's sole supplier, the Wall Street Journal said yesterday.

The paper said AirAsia, which is currently completing an initial public offering, is expected to announce the order in a few weeks. Airbus was not immediately available to comment. Citing sources familiar with the order, the newspaper said Airbus's offer was priced well below Boeing's bid.

The two companies are currently locked in a trade dispute over state aid, which has seen the United States and the European Union file cases at the World Trade Organisation.

Airbus is 80 per cent owned by the European Aeronautic, Defence and Space Co (EADS) and 20 per cent owned by Britain's BAE Systems.

Meanwhile, Xiamen Airlines, a regional carrier controlled by China's largest airline, may buy and lease Boeing 737-800 planes starting in 2006 as it expands its fleet to meet growing demand for air travel.

'We have not decided on the number of planes,' Wang Zhouzhou, manager of Xiamen Air's financing office, told reporters at an aviation conference in Hong Kong. 'We do have plans to replace the 737-300 and 737-500 planes in our fleet.' Fujian, southeastern China-based Xiamen Air, which is controlled by China Southern Airlines Co, and other Chinese carriers are expanding their fleets as rising urban incomes boost demand for air travel in the country. Passenger traffic in China is forecast to grow at an annual 7.3 per cent in the next two decades, compared with a global average of 5.2 per cent, according to Chicago-based Boeing. The 737-800 can carry as many as 189 passengers and has a range of up to 5,449 km. Each 737-800 aircraft costs as much as US$69.5 million, according to catalogue prices.

Xiamen Airlines currently operates a fleet of 29 Boeing aircraft, 10 of which are 737-300s and 737-500s, Mr Wang said. - Reuters, Bloomberg

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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Business Times - 13 Nov 2004

AirAsia in advanced talks to buy new planes

(KUALA LUMPUR) Low cost carrier AirAsia Bhd is at an advanced stage of negotiations for new aircraft purchases and an agreement may be reached as early as next month to acquire up to 80 new aircraft, says group chief executive Tony Fernandes.

He said AirAsia was mulling a proposal for 40 firm orders and 40 options from Airbus Industrie or Boeing. 'Although the board of directors has not accepted any current proposal from Airbus or Boeing, negotiations are now at an advanced stage and an agreement may be reached as early as December 2004,' he told Bernama.

Mr Fernandes said the company would also have to consider factors like the routes that can be flown with such aircraft, ability to secure approvals to fly such routes, the potential risks and operating difficulties of such an aircraft type and whether AirAsia could maintain substantial unrestricted cash balances.

He also said yesterday that AirAsia will fly into China from Bangkok and Kota Kinabalu tentatively from February next year. It was in the midst of getting approval from the relevant authorities.

Among the places that AirAsia hopes to fly into in China are Xiamen, Guangzhou, Hainan, Chongqing and Chengdu. AirAsia currently flies to Macau, from Bangkok and is expected to launch more flights there.

Currently, it has a fleet of 24 aircraft and operates 322 flights a week from Kuala Lumpur International Airport (KLIA) to 14 domestic and eight international destinations.

Mr Fernandes said the fleet expansion plan would come partly from the proceeds from its Initial Public Offer (IPO), debt or lease financing or banking facilities and cash expected from operations. It is raising RM863.4 million (S$376 million) via an IPO. The airline sold its shares to institutional investors - which received 80 per cent of the 700.5 million shares offered - at RM1.25 a share. The rest was sold to retail investors who paid 93 per cent of the institutional price or RM1.16 a share.

On its plan to acquire Indonesia's PT Air Wagon International (Awair), Mr Fernandes said AirAsia had entered into two conditional sale and purchase agreements to acquire a 49 per cent stake for US$2 on Aug 30. Awair operated as a full service carrier before suspending operations in March 2002.

Completion of the transaction is subject to various conditions including approval by Indonesian regulatory authorities and further due diligence by AirAsia, he said.

AirAsia plans to operate from a hub at Jakarta's Soekarno-Hatta International Airport. He said Awair could restart operations as early as next month, even before the deal is finalised.

Separately in Bangkok, Thai AirAsia, 49-per-cent owned by Malaysia's AirAsia Bhd, said yesterday surging fuel costs meant it will not be profitable until the end of 2005 rather than the end of this year as anticipated previously.

'By the end of next year, we will be profitable,' Thai AirAsia chief executive Tassopon Bijleveld told an analyst meeting.

Thai AirAsia is 50 per cent owned by Shin Corp PCL, Thailand's largest telecoms group, founded by Prime Minister Thaksin Shinawatra.

The airline, which started operations in February, had said it expected to make a profit in its first year of operations. - Bernama, Reuters

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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13 November 2004
Malaysia's AirAsia plans to fly to China by February: report

KUALA LUMPUR : Malaysia's AirAsia plans to begin flying to China by February, which will open up a giant market for the no-frills carrier as it heads for a listing in less than two weeks, a report said Saturday.

Chief executive Tony Fernandes was quoted by the New Straits Times as saying the airline was in the midst of securing approvals to fly to key Chinese cities such as Xiamen, Chengdu, Guangzhou, Chongqing and Hainan from Bangkok through its subsidiary Thai AirAsia.

"We do not expect to have difficulty in this area as there is a bilateral open skies air service agreement already in place between Thailand and China," he said, adding that it expected to start flights before the Chinese Lunar New Year - a peak season travel in East Asia.

Fernandes said the carrier also planned to operate China-bound flights from Kota Kinabalu, the capital of Malaysia's Sabah state on Borneo island, pending the completion of expansion work at the airport there.

"We have also applied for government approvals to fly between Malaysia and China, and expect to do so sometime next year," he said, adding that AirAsia chose Kota Kinabalu instead of Kuala Lumpur because it was closer to China.

He said AirAsia would start daily flights to Macau from Kuala Lumpur on December 15.

The airline has already made daily flights from Bangkok to Macau since June - its third international destination out of Thailand after Singapore and Malaysia.

Analysts said AirAsia's entry into China would boost its revenue given strong trade ties and the 2008 Olympic Games in Beijing. Malaysia was China's seventh-largest export market last year, while the mainland was Malaysia's fourth biggest.

Fernandes said AirAsia, which aims to buy 80 new planes over the next few years, has still not decided whether to purchase from Boeing or Airbus despite reports that Airbus had won the deal.

"This is a big decision. We expect an announcement will be made by the end of January," he said. AirAsia, which started with just two aircraft in 2002, now has a fleet of 24 Boeing 737-300s plying the region.

He reiterated the expansion plan was still on track despite AirAsia's initial public offering (IPO) raising less funds than first indicated.

AirAsia set the price for the institutional tranche of its IPO at 1.25 ringgit (0.33 dollars) per share and the retail tranche at 1.16 ringgit, well below the indicative price of 1.40 ringgit, to raise some 717.4 million ringgit.

It will debut on the stock exchange on November 22 to become the first budget carrier listed in Southeast Asia. - AFP

Copyright © 2004 Agence France Presse. All rights reserved.
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Business Times - 19 Nov 2004

AirAsia to start operations of Indon joint venture by January

KUALA LUMPUR - Asia's best-known budget carrier, Malaysian-based AirAsia, could be ready for takeoff in Indonesia as early as January, a newspaper reported on Friday.

The timing of the maiden flight of AirAsia's Indonesian joint-venture, PT AWAir, would depend on when AirAsia completes a due-diligence review of the airline's financial details and finalises the deal, The Star newspaper said, quoting the airline's executive director, Kamarudin Meranun.

AirAsia is paying a token US$2 (S$3.29) to buy 49 per cent of PT AWAir, a debt-ridden Indonesian airline that suspended operations in March 2002.

The Indonesian joint venture will be AirAsia's second overseas foray after Thai AirAsia, in which the Malaysian carrier also has a 49 per cent stake.

Thai AirAsia is 51 per cent owned by Shin Corp, which is controlled by the family of Thai Prime Minister Thaksin Shinawatra.

PT AWAir won't have any debt once the joint-venture is finalised, Mr Kamarudin said. AirAsia last month raised RM863.4 million (S$381.3 million) in Malaysia's biggest initial share offering this year. Its shares will begin trading on Monday.

'What we want to do is revive the operations and ply the routes that had been given to PT AWAir. We are also eyeing several other destinations,' Mr Kamarudin was quoted as saying.

PT AWAir, using leased aircraft, used to fly from the Indonesian capital, Jakarta, to Denpasar in Bali, Surabaya and Medan.

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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This story was printed from TODAYonline

AirAsia shares take off

Counter makes 11% ascent from IPO price on first trading day

Tuesday • November 23, 2004

Shares of AirAsia rose 11 per cent on their first trading day in Malaysia on expectations that new routes to China and Indonesia, and lower fuel prices will boost profit. The airline's shares rose 15 sen (6.5 cents) to RM1.40 yesterday.

AirAsia's offering last month raised RM863 million, with institutional investors paying RM1.25 a share. Individual investors were offered its stocks at RM1.16 each.

The low-fare airline plans to keep ahead of competitors by tapping East Asia's two most populous nations with routes to Kunming in western China and to Jakarta.

The share sale may help chief executive Tony Fernandes to order, as early as next month, 80 new planes from Boeing or Airbus.

"AirAsia has a lot of potential, it has so many routes to tap," said KLCS Asset Management chief investment officer Choo Swee Kee. "It's a very decent debut."

The price of jet fuel, which AirAsia said accounted for about a third of operating expenses, has fallen 10 per cent in Asia since the Oct 25 stock sale. The price of jet fuel fell to US$57.25 a barrel on Nov 19 in Singapore, from the record US$63.95 a barrel on Oct 14, according to pricing service Platts.

Yesterday, about 149.2 million AirAsia shares changed hands, making the stock the most actively traded on Malaysia's stock exchange. It rose as much as 20 sen earlier, or by 16 per cent, to RM1.45.

"There is a lot more potential in the company," AirAsia executive director Kamarudin Meranun said. "Don't look at it as just a Malaysian company, but as growth in the region."

"Any investor aiming to buy Malaysia will probably pick up some AirAsia stock," Ms Chong Sui San of Allianz General Insurance Malaysia said before the trading debut. — Bloomberg

Copyright MediaCorp Press Ltd. All rights reserved.
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Business Times - 06 Dec 2004

AirAsia pushes for low-cost hub

(KUALA LUMPUR) Malaysian budget carrier AirAsia said Malaysia should reopen an old airport for regional low-cost carriers despite an objection from its bigger rival Malaysian Airline System (MAS).

AirAsia, which helped pioneer the low-cost airline model in Asia and wants to become the region's leading no-frills carrier, said the government should do away with 'one-airport' policy for Kuala Lumpur and set up a dedicated hub for budget airlines.

'I think the biggest stumbling block is lack of knowledge, I think they have been hearing it from one party, MAS,' AirAsia chief executive officer Tony Fernandes said.

'MAS is thinking that business will be destroyed. I don't think so because we only fly to Indonesia and Thailand,' he said.

He said AirAsia should be allowed to quit the expensive and congested Kuala Lumpur International Airport (KLIA) and move to the old Subang airport nearer to the capital to help cut operating cost by up to 20 per cent.

If the government allows it, it will mean Malaysia is trying to rival neighbouring Singapore, which is emerging as a main hub for low-cost carriers currently mushrooming across Asia.

Prime Minister Abdullah Ahmad Badawi's Cabinet will decide this month on whether to reopen Subang after listening to AirAsia, MAS and others, a government official said.

Mr Fernandes said the two-airport strategy has been successful in several countries like Australia, Brazil and Italy.

AirAsia was eyeing Subang because of the need for quick departures and arrivals, he said, adding the KLIA was congested, resulting in flight delays.

MAS chairman Munir Majid was quoted by newspapers as saying recently that Subang should not become another 'confusing hub' in the interest of the nation and the national carrier.

AirAsia critics said operating two airports within a distance of 64 km would be expensive for the government and would only retard the growth of KLIA.

Subang was opened in 1965 and ceased operations in 1998 with the opening of the ultra-modern, cavernous KLIA.

Malaysia Airports Holdings, which operates KLIA and 22 other airports in the country, will decide soon on whether to build a dedicated terminal for low-fare carriers' operations as part of the second phase of KLIA's expansion programme, which is supposed to begin in the second quarter of 2005.

But Mr Fernandes said building a dedicated terminal at KLIA would not be the answer as it would still drive up costs.

For now, the second-phase project is set to include a second satellite building with 37 gates and 42 parking bays, which should be finished in early 2007. Handling capacity will be doubled to 50 million passengers a year. - Reuters

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.
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Posted: 15 December 2004 1550 hrs

AirAsia to buy 40 Airbus jets in blow to Boeing: source

KUALA LUMPUR : Malaysian budget carrier AirAsia has opted to buy 40 A320 jets from Europe's Airbus and will phase out its current Boeing fleet, an industry official said Wednesday, a decision seen as a major setback for the US aerospace giant in the burgeoning Asian low-cost airline market.

"Yes, AirAsia has picked Airbus. It will buy 40 jets. The contract will be inked on Friday," the industry source familiar with the deal told AFP.

AirAsia officials declined to comment.

Asked why rival Boeing lost the deal, the industry insider said: "In terms of price and technical specifications, Airbus is better."

"All the current Boeing aircraft with AirAsia will either be phased out or sold," the source added.

AirAsia, the region's largest low-cost carrier, currently operates a fleet of 26 Boeing 737 aircraft.

Boeing officials have acknowledged that capturing the contract was critical for them to regain sales momentum in the market.

The source declined to reveal the cost of the 40-jet deal, saying only: "They are getting it cheaply."

The order would be valued at US$5.2 billion at the catalog price but AirAsia was likely to receive significant discounts, the Wall Street Journal said in a report on the negotiations last month.

Quoting people familiar with the offer, the newspaper said the A320 jetliners were priced well below Boeing's.

The industry source told AFP the first aircraft would arrive in early 2006, followed by one jet each month.

Australia-based managing director for the Centre for Asia-Pacific Aviation, Peter Harbison, told AFP that AirAsia's decision to pick Airbus was bad news for Boeing.

"It is not good news for the US manufacturer since the current fleet consists of Boeing. Five years ago, Airbus was invisible over Asian skies. It is now becoming dominant," he said.

Harbison attributed Airbus's success to better pricing and the ability to meet demand.

"Part of the problem for Boeing is being not able to produce aircraft. After (the terror attack on the US on) September 11, local carriers were not placing new orders and Boeing downsized its labour force.

"Now there is a surge in demand from low-cost carriers and Airbus is in a stronger position to produce. They are also aggressive in pricing," he said.

Harbison said with the new order, AirAsia would have the youngest fleet in Asia, putting the carrier "well ahead of anyone else."

AirAsia has set its sights on a fleet of 80 aircraft and is expected later to take an option to buy or lease 40 more Airbuses.

The three-year old no-frills carrier has expanded from a two-jet operation to become Asia's leading economy airline, carrying 7.5 million passengers since its launch in December 2001.

It operates 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations, and plans a major regional expansion programme.

AirAsia became the first budget carrier to be listed in Southeast Asia in November, when its initial public offering (IPO) was snapped up by investors. - AFP
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