AirAsia scraps plan to acquire Batavia Air

15 Oct 2012

AirAsia has scrapped its plan to acquire Metro Batavia, which owns Indonesian carrier Batavia Air (BTV) and Aero Flyer Institute, and will instead enter into a “multilateral, multiphase collaboration agreement” with the company.

The airlines announced plans to completely buy out Metro Batavia in July (see report here). The move was part of the low-cost carrier’s bid to expand in the rapidly developing Indonesian market.

In a statement, AirAsia said it had decided the process of integrating the two airlines following a buyout would take up considerable time and effort that could be more efficiently utilised in a targeted manner. 

Tony Fernandes, chief executive of AirAsia, also said: “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.” He added that the airline will continue to focus on aggressive expansion in Indonesia and push ahead with plans for an Indonesian IPO.

Dharmadi, chief executive of AirAsia Indonesia, said that the airline will accelerate its fleet expansion starting from 2013 onwards and will more than triple its fleet in the next five years.

The AirAsia statement added that the low-cost carrier and Batavia Air will instead work together in ways which still “deliver many of the intended benefits of an acquisition”. The two airlines will collaborate on ground handling, distribution and inventory systems. 

Nicholas Olczak 

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