Malaysia's AirAsia Buys Batavia Air Of Indonesia For $80 Million

JAKARTA (AFP) - Malaysia-based AirAsia said it is paying $80 million in cash for Indonesia's Batavia Air, as the region's biggest budget carrier spreads its wings in Southeast Asia's largest economy.

"In accordance with Indonesian civil aviation ownership regulations, AAB will hold a 49 percent stake in Metro Batavia Group with the 51 percent majority held by its Indonesian partner, Fersindo," the group, AirAsia Berhad (AAB), said in a statement.

"The acquisition of 100 percent interest in Metro Batavia by AAB and Fersindo will be carried out in two stages, through acquisition of a majority 76.95 percent stake and subsequently followed by the remaining 23.05 percent held by its existing shareholders."

Acquisition is expected to be completed by the second quarter of next year, and is subject to regulatory approvals in Indonesia, it said.

"The total purchasing consideration for Metro Batavia Group is $80 million and will be settled in cash," the statement added.

AirAsia has been shoring up its presence in the region against a host of other competitors, including Lion Air, Indonesia's largest low cost carrier.

"The Batavia Air acquisition is a fantastic opportunity for AirAsia to accelerate our growth plans in one of the most exciting aviation markets in Asia and further underlines our belief in the growth potential of Indonesia's aviation sector," said Tony Fernandes, Group CEO and Director of AAB.

Batavia Air is a largely domestic carrier with about 30 planes and a few international routes such as Jeddah, Singapore and Guangzhou.

It has been bouncing through financial turbulence recently, with the transportation ministry confirming the carrier was forced to return two leased Boeing 737 airliners to its owners after failing to pay overdue bills.

Demand for air travel in Indonesia, an archipelago of more than 17,000 islands with a growing middle class among its 240 million population, has been soaring.

Its domestic airlines carried more than 60 million passengers last year, and the Indonesia Air Carriers Association predicts a 52 percent increase in passenger numbers by 2015.

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