AirAsia starts courier service

09 July 2009

AirAsia founder Tony Fernandes said the new venture would expand the low-cost carrier's non-airline revenue and help protect it from future oil-price spikes.

KUALA LUMPUR - BUDGET carrier AirAsia on Thursday launched 'Redbox', an express courier service it says will be 50 per cent cheaper than its rivals.

AirAsia founder Tony Fernandes said the new venture would expand the low-cost carrier's non-airline revenue and help protect it from future oil-price spikes.

'There is a huge untapped consumer market. I don't think many individuals use courier services,' he told a news conference.

Mr Fernandes said the Malaysian courier industry was worth 500 million ringgit (S$204 million) annually and that he intended to capture 30 million ringgit of that in the first year, a goal he said was 'easily achievable.'

The company is billing Redbox - named after the airline's signature colour - as the world's first low-cost courier service.

'It will build strong revenue, and bring costs down for business so they can be more efficient,' Mr Fernandes said.

Currently, 12 per cent of AirAsia's revenue is from ancillary services like food sold on planes, and Mr Fernandes is aiming to boost that figure to 20 per cent within the next few years.

AirAsia is partnering with Mail Boxes Etc, which will provide collection points for packages, and technology consulting firm DMSBT, which will establish an Internet service to track individual shipments.

Transport firm DHL will convey cargo to and from the airport.

Redbox will initially operate only within Malaysia, and next year extend to AirAsia's 65 destinations in Australia, Britain, China, India and Southeast Asia.

AirAsia refutes reports it is writing-off dues from two units

09 July 2009

PETALING JAYA: There will be no write-offs on the amount owed by Thai AirAsia (TAA) and Indonesia AirAsia (IAA) to parent AirAsia Bhd, said AirAsia group chief executive officer Datuk Seri Tony Fernandes.

This is in contrast to what some analysts are saying in their reports, which have suggested a possible write-off of RM603mil, of which RM248mil is from TAA and RM355mil from IAA.

As at Dec 31, 2008, IAA and TAA owed RM974mil and RM457mil to AirAsia respectively, while the amount owed by AirAsia to IAA and TAA was RM619mil and RM209mil respectively. Net borrowings due to AirAsia are RM603mil.

“A draft agreement is being prepared to ratify and seek approval from AirAsia shareholders at an EGM to be called on Aug 3 for the past and continuing financial assistance to the two units,’’ Fernandes told StarBiz.

This is necessary since the amount owed by the two 49%-owned associates exceeds the 5% threshold of AirAsia’s shareholders’ funds which stand at RM1.81bil.

TAA and IAA have paid-up capitals of 400 million baht and 180 billion rupiah respectively.

AirAsia has been funding the two associates since they began operations and the unwinding of fuel hedgings has had an impact, thus raising the level of their borrowings.

AirAsia, unlike many other airlines, decided to end its hedges when fuel price headed south.

Fernandes said the two units were now cash-flow positive and that they had been paying back some of their dues, but noted that it would take two to three years for them to fully pay their dues to AirAsia.

Things are looking much better since the group embarked on a change in the aircraft type and expanded routes.

“If anything, the losses in the recent past were also small and incurred due to geopolitical and market conditions,’’ Fernandes said.

“Our Indonesian operations are enjoying brisk sales as IAA is now flying to more international routes, especially to Singapore and Australia. Our Bali hub is also performing way above expectations. We are very bullish on both the countries and Indonesia is turning out to be politically stable.’’

The change in aircraft type was from B737 to A320, which is more fuel efficient.

“It is a turnaround story and by 2010, all the B737 aircraft will be replaced with the A320 and we will have phenomenal cashflow and benefit from this move,’’ Fernandes said.

Thai AirAsia has 14 aircraft (nine A320s and five B737s) while Indonesia AirAsia has 11 (seven A320s and four B737s). All these aircraft are leased from AirAsia.

“This year, TAA will get four more new A320s and IAA seven more and that allows them to expand further,’’ Fernandes said.

Part of the dues from the associates to AirAsia is from the cost of leasing the aircraft for their respective operations.

$99 Bali flights as AirAsia expands

8 July 2009

Low-cost airline AirAsia is offering Perth to Bali airfares from $99 to mark the addition of a second daily flight to this route.

The airline starts flying from Perth to Bali route from July 17 and said it would add a second daily flight from August 19.

Earlier this year people snapped up airline seats in just three hours after it announced it would operate on the route.

Regional head of commercial of the AirAsia group, Kathleen Tan, said the group was confident the Bali-Perth route would perform well.

“The huge response clearly demonstrates a demand for this connection. Likewise, there is a strong Indonesian community residing and pursuing studies in WA.

“Our loads for the forthcoming three months are running past 90% and we feel it is timely to add a second frequency. We stay true to our brand promise and are committed to offering the lowest fares and best value to our guests,” Ms Tan said.

“In addition, guests can look forward to our Bali hub as a gateway to connect to Bangkok, Singapore, Kuala Lumpur, Jakarta and another recently added popular tourist spot, Bandung, all at our amazing low fares.”

Promotional flights on the Bali-Perth route will be on sale from July 9-12 for travel from August 19 to April 30, 2010.

These seats are limited and available on a first-come, first-served basis and bookings can be made exclusively online via www.airasia.com and mobile.airasia.com

The new route will be served by AirAsia’s brand new Airbus A320 aircraft.

AirAsia aims to park 10 planes in Penang to start new hub

08 July 2009

This is in line with plans to make island its eighth hub

GEORGE TOWN: AirAsia Bhd’s plan to park more planes at the Penang International Airport can materialise faster if Penang has a low-cost carrier terminal.

Regional head of commercial Kathleen Tan said the budget airline operator had plans to park 10 planes in Penang, which was in line with its goal of making the island its eighth hub.

AirAsia has hubs in Kuala Lumpur, Johor Baru, Kota Kinabalu, Bandung, Bali, Jakarta and Bangkok; and a “virtual hub” in Singapore.

“This is our long-term plan to enhance the attraction of Penang as a hub. Presently the cost of operation in Penang is very high. If Penang had a low-cost carrier terminal, it would reduce our operation cost, and attract more travellers to fly from Penang,” she said in a telephone interview from Kuala Lumpur.

File pic of AirAsia aircraft at Kuala Lumpur International Airport's low cost carrier terminal in Sepang. Malaysian budget carrier is to park 10 planes in Penang and make Penang its 8th hub.

Tan said presently the Penang airport imposed higher international and domestic taxes, at RM51 and RM9 compared with RM25 and RM6 respectively charged at the Low-Cost Carrier Terminal in Kuala Lumpur.

She said from July 31, AirAsia would station one plane in Penang for the four weekly flights to Hong Kong. The round trip fare is about RM200.

“We are engaging a support team comprising pilots, engineers and technicians to be based at the Penang airport,” she said, adding that AirAsia was also adding a second flight to Singapore from Penang starting July 31.

AirAsia share sale may go to single investor

07 July 2009

Tony Fernandes, CEO of Malaysia low cost carrier AirAsia, says the 20% share issue the airline plans could go to a single investor.

"(A single investor) is an option," says Fernandes in an email to ATI. "Many have approached us for the whole twenty per cent."

Fernandes says he has no preference between a local or foreign investor, and confirms that she share sale is to reduce debt.

In late June the airline issued a brief announcement to Bursa Malaysia, Malaysia's stock exchange, saying it plans to issue new shares, equivalent to 20% of its issued and paid-up capital.

Further details will be made available upon appointment of the proposed agents, it said.

AirAsia currently has over 100 Airbus A320s on firm order and is now working to get financing for some of these.

AirAsia up on plan to sell shares to one fund

07 July 2009

AirAsia Bhd, Southeast Asia’s largest low-cost airline, rose for the first time in three days in Kuala Lumpur trading after saying it may sell all of a planned new share issue to a single investor

The stock added 1.8 per cent to RM1.12 at 9:04am.

AirAsia, which is planning to issue as much as 20 per cent more stock, is considering selling the stake to a single institutional fund or a strategic investor as part of a plan to reduce debt, chief executive officer Datuk Seri Tony Fernandes said in an interview late yesterday.

A strategic investor might be a private equity firm or a partner in the tourism industry, said Fernandes. He said he plans to meet potential buyers this month and the share sale should be completed in early August.

AirAsia hits the ground running

07 July 2009

AirAsia’s 20-strong team of runners has competed in their first Gold Coast Airport Marathon event.

Staff from the airline’s engineering department, cabin crew, guest services and corporate culture teams joined AirAsia X ceo Azran Osman-Rani and over 23,000 runners in yesterday’s event in perfect weather on the Gold Coast.

Mr Osman-Rani said AirAsia’s participation in the marathon and the few days spent on the Coast would provide staff with a great experience of one of their most popular destinations.

“The Gold Coast was our first Australian hub and has performed consistently well over the past few years,” he said. “Some of our staff don’t have the opportunity to sample the lifestyle and culture of the places we are promoting to the Asian market and we hope that by participating in the Gold Coast Marathon, our staff will experience things first hand, have a unique experience and enjoy themselves.”

Singapore’s costumed celebrity runner Jenap M. Said; Gold Coast Airport Marathon ambassador Robert de Castella; AirAsia X ceo Azran Osman-Rani; and Great Barrier Reef Island Caretaker Ben Southall.