T

he Transportation Ministry has given its approval to PT Metro Batavia to sell its stake in Batavia Air to PT Fersindo Nusaperkasa, the owner of 51 percent of Indonesia AirAsia (IAA), and Malaysia-based AirAsia Berhad.

“We agree that Batavia Air can sell its shares to Fersindo and AirAsia Berhad, and the process should be in line with ownership regulations in Indonesia, which require at least 51 percent Indonesian ownership,” the ministry’s air transportation director general Herry Bhakti Gumay said.

“This approval will allow the acquisition process to go forward as soon as they want,” Herry said.

The ministry based its decision on documents sent to the ministry last month, including a breakdown of Fesindo’s shareholders, he said.

The regulator previously said that it might prevent the acquisition if the foreign ownership limit for national airlines was breached.

Herry said the ministry would not hesitate to revoke Batavia Air’s flight permit.

Batavia Air commercial director Sukirno Sukarna said the company received approval from the ministry on Wednesday evening.

“We are going to further communicate this to Fersindo and AirAsia Berhad,” Sukirno told The Jakarta Post over the telephone.

After due diligence was complete next month, the firms would acquire a 76.95 percent stake in Batavia Air, Sukirno said.

“If everything goes smoothly as planned, the first phase of the acquisition will take place either in the middle or end of September,” he added.

Dharmadi, the president director of both Fersindo and IAA, said in a statement that the acquisition would be complete by March 2013 and that it was likely that the airline’s new owners would transform Batavia into a budget carrier.

On Metro Batavia’s remaining 23.05 percent stake in the airline, Sukirno said the firm was still considering whether to sell it.

“We still have an option to keep the 23.05 percent share. The whole business plan is still being discussed both internally by Batavia management, and with Fersindo and AirAsia Berhad,” Sukirno said.

Fersindo and AirAsia Berhad signed an agreement on July 26 to buy Metro Batavia for US$80 million (Rp 756 billion).

According to the previous acquisition plan, AirAsia will own a 49 percent stake in Metro after he deal, while Fersindo will hold the remaining 51 percent in order to comply with Indonesian
ownership rules.

After the acquisition, AirAsia Berhad will operate 45 aircraft: 21 aircraft belonging to IAA and 24 to Batavia. They expect to carry 14 million passengers this year, accounting for 20 percent of the market.

According to Transportation Ministry data, the number of airline passengers in Indonesia reached 68.19 million last year: 60.04 million domestic passengers and 8.15 million international passengers.

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

Batavia Air flew almost 7 million passengers last year: 6.75 million domestic and 292,280 international passengers.