AirAsia pulls out of Batavia deal

AirAsia pulls out of Batavia deal

LCC to concentrate on developing its Indonesian subsidiary
LCC to concentrate on developing its Indonesian subsidiary

AirAsia has decided not to proceed with its planning acquisition of Indonesian carrier, Batavia Air.

The low-cost carrier said that the initial share purchase agreement, which was agreed in July this year, will be “realigned”, and that the carriers will now work together in areas of ground handling, distribution and training.

“We always knew it was not going to be an easy transaction,” said AirAsia’s Group CEO Tony Fernandes. “The company’s decision was based on a thorough evaluation by many parties into Batavia Air. In our minds, the timing was perhaps not appropriate as it would have induced too many risks and would ultimately be earnings dilutive to our shareholders.”

Fernandes added that AirAsia will now move ahead with its own Indonesian expansion and IPO, along with cooperating with Batavia in other areas. AirAsia’s Jakarta-based subsidiary will accelerate its fleet expansion plans from 2013 and is expecting to more-than-triple its fleet size in the next five years, from approximately 30 aircraft at present.

The revised tie-up between AirAsia and Batavia will include ground handling, distribution and inventory systems, while an aviation training joint venture will also be established.

“All parties worked very hard to realise this transaction. Ultimately what matters is for both airlines to continue to provide the best service and choices for the Indonesian traveller and our collaboration agreement will help to support that,” commented Batavia Air’s Managing Director, Ibu Alice Tansari.

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