AirAsia seeks fresh investment from Mideast
Abu Dhabi, August 19, 2009
Low-cost Malaysian carrier AirAsia's long-haul unit is in talks with Middle Eastern investors, its chief executive said, as it seeks fresh capital to help fund a potential expansion into Europe and Africa.
Air Asia X CEO Azran Osman-Rani said the Malaysian carrier needs 'a stronger equity base after 2010', as it launched direct flights from Kuala Lumpur to Abu Dhabi.
'There has been interest from investors in the Middle East, including institutional investors and sovereign wealth funds,' he said.
He declined to specify who the carrier was in talks with, adding that the size of any stake sold 'will be decided next year and (depends) on the appetite of investors'.
Bahrain-based Manara Consortium took a 10-percent stake in Air Asia X last year.
Launched in 2007, Air Asia X currently flies to eight destinations including China, Australia and the UK from its Kuala Lumpur base.
The airline has a fleet of five aircraft -- A330s and 340s -- and plans to take delivery of three more A330s before the end of 2009, he said.
It also plans to increase the frequency of Abu Dhabi flights to five a week in November and make the UAE capital a regional hub.
It aims to expand to other Mideast destinations and into mainland Europe and north and east Africa after that.
Spain and Scandinavia
'Spain, Scandinavia and east or north African cities are interesting markets. There are lots of proposals, we will choose markets that are unexploited, under-served,' he said.
Abu Dhabi is the airline's first destination in the Middle East and it is eyeing Jeddah as its next spot to capitalize on travellers heading to Saudi Arabia for pilgrimages, Osman-Rani said.
Air Asia X had an average passenger load factor of 75 per cent in the first six months of this year, Osman-Rani said, projecting an increase in revenues this year despite low fares.
'Forward loads are stronger,' he said. 'Ours is a volumes strategy. Margins are thin but we have very low unit costs - 2.4 US cents per seat kilometre, January to June including fuel.'
The airline did not hedge its fuel costs for this year but will take positions in 2010 and 2011. – Reuters