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Batavia may sell stake to local airline operator

Batavia Air, one of Indonesia’s fast growing airlines, is seeking a new business partner to further strengthen the company’s business after Malaysia’s AirAsia Berhard and its Indonesian partner PT Fersindo Nusaperkasa cancelled their plan to acquire the airline in October

Nurfika Osman (The Jakarta Post)
Jakarta
Wed, December 19, 2012

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Batavia may sell stake to local airline operator

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atavia Air, one of Indonesia’s fast growing airlines, is seeking a new business partner to further strengthen the company’s business after Malaysia’s AirAsia Berhard and its Indonesian partner PT Fersindo Nusaperkasa cancelled their plan to acquire the airline in October.

Batavia Air commercial director Sukirno Sukarna said in Jakarta last week the airline would need a partner to further improve its services.

 “We have prepared our business plan for 2013 and we are looking for a partner to work together with Batavia to better shape this
company. We hope we can collaborate with a domestic airline next year,” Sukirno told The Jakarta Post on Sunday.

He refused to disclose the name of an airline operator that has expressed interest in being their partner. Like the Malaysian airline, the new partner would also acquire part of the shares of PT Metro Batavia, which directly owns Batavia Airline.

Metro Batavia is likely to sell 40 to 60 percent of its stake to the new partner. But, the figure still could change, depending on the agreement between Batavia and the partner later, he said.

“It will help us expand our capital, make the business even better, and rejuvenate our fleet as well. We are optimistic we can do better next year because aviation keeps growing in Indonesia,” he said.

AirAsia Berhad and Fersindo, the owner of a 51 percent stake in Indonesia AirAsia (IAA), signed a memorandum of understanding (MoU) at the end of July to buy PT Metro Batavia for US$80 million in a move to help strengthen the former’s foothold in the fiercely competitive environment facing low-cost airlines in Indonesia.

Under the agreement, AirAsia Berhad would have owned 49 percent of Metro Batavia, while Fersindo would have held the remaining 51 percent in order to meet Indonesian ownership rules.

However, both companies announced the cancellation of the plan in mid October because the deal “poses many risks” and “may prompt concerns” among the Malaysia-based company’s shareholders.

As a consequence, Batavia has decreased flight frequency on some of its routes, both domestic and international, to help increase efficiency, since October. The Jakarta–Medan, Jakarta–Ambon via Surabaya, Jakarta–Manado, and Bandung–Singapore were among those reduced.

“But, we are going to resume some routes that we suspended because two out of 13 aircraft that we put in the maintenance, repair, and overhaul facilities are ready to operate soon,” he said.

The additional two Boeing 737s are expected to fly again in Dec. 18 to serve Jakarta–Ambon and Jakarta–Manado.

He said that the routes were going to help boost the company’s business during Christmas and New Year holidays because both were Christian-based cities where people returned to their hometowns to
celebrate Christmas.

In total, the company will operate 22 out of 33 aircraft by the end of this year. “We hope to operate all of our aircraft next year and lease 12 Airbus A320s to phase out the aging 737-300s and 737-400s,” he added. Based on Transportation Ministry data, Batavia Air passengers totaled 7 million in 2011: 6.75 million domestic passengers and 292,280 international passengers, taking an 11.25 percent domestic market share and 3.59 percent of the country’s international market share.

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