Wed, 06 May 2009
From: The Jakarta Globe
By Janeman Latul & Putri Prameshwari
PT Indonesia AirAsia, the local unit of Kuala Lumpur-based AirAsia, Asia’s largest low-cost carrier, is set to acquire aircraft worth $715 million under lease financing arrangements, adding to its fleet of 29 aircraft currently operating in Indonesia.

“We will acquire approximately 11 planes, Airbus A320-200s, this year,” said Widijastoro Nugroho, marketing director for Indonesia AirAsia, at a press briefing on Tuesday. “The cost per plane is about $65 million.”

Nugroho said the expansion plan formed part of its parent company’s strategy to lease about 175 A 320-200s to be delivered in stages up to 2014.

“Indonesia AirAsia will get about 45 planes, including 11 this year,” he said.

Based on the Jakarta Globe’s calculations, the total cost of the fleet expansion may be as much as $11.4 billion for the whole AirAsia group, while the Indonesian unit may need to spend up to $2.9 billion.

'We will acquire approximately 11 planes, Airbus A320-200s, this year. The cost per plane is about $65 million.'

Widijastoro Nugroho

According to Nugroho, AirAsia has secured lease financing from the European-based Export Credit Agency, as well as from Middle East financial institutions that lend under Shariah arrangements. Nugroho declined to give further details on the financial agreements, including tenure and interest rates.

Dharmadi, president director of Indonesia AirAsia, said that during 2008 the airline carried about 2.5 million passengers and was projecting as many as four million passengers over the course of this year.

He said the local unit recorded Rp 1.2 trillion ($115.2 million) in revenue in 2008 and expected to lift that figure to Rp 2.2 trillion this year.

“However, for net profit we cannot disclose it yet, because we have not finished [calculating it] but I'm sure it will be a break-even situation,” he said.

To meet revenue targets, Indonesia AirAsia launched a new route linking Indonesia and Australia on Tuesday, making it the first of the country’s budget airlines to fly there.

The carrier will fly twice a day from Denpasar to Perth, Australia, from July 17.

“We're connecting our markets in Australia and Southeast Asia,” Dharmadi said, adding that two Airbus A320s would be deployed to serve the route. Currently, the Denpasar-Perth run is served only by national flag carrier Garuda Indonesia.

He said that in the first year of operation, the carrier expected an average of 70 percent of the seats on the 180-seat capacity Airbus planes to be filled.

He also said that Indonesia AirAsia was planning to rejuvenate its fleet by applying a single-aircraft policy by 2010, using only Airbus and gradually putting all six of its Boeing 737s to rest, citing efficiency in maintenance as the main reason.

Aside from its mega expansion plans, AirAsia had a bad year in 2008, reporting a net loss of $141.5 million, a reverse from 2007 when the company recorded $140.6 million in profit, according to Bloomberg.



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