Malaysia's AirAsia to buy Indonesia's Batavia Air

Associated Press
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AirAsia Chief Executive Officer Tony Fernandez, left, hugs Batavia Air President Director Yudiawan Tansari during a joint press conference in Jakarta, Indonesia, Thursday, July 26, 2012. Low-cost airline AirAsia said it is buying Indonesian budget carrier Batavia Air to expand in Southeast Asia's biggest economy. (AP Photo/Achmad Ibrahim)

JAKARTA, Indonesia (AP) — Low-cost airline AirAsia said Thursday it is buying Indonesian budget carrier Batavia Air from its founder for $80 million to expand in Southeast Asia's biggest economy.

AirAsia CEO Tony Fernandez said the acquisition will strengthen his airline's position in Indonesia's lucrative air travel market and speed its expansion.

Indonesia has a population of 240 million and a rapidly growing middle class that is hungry for cheap air travel. Late last year, Indonesia's Lion Air ordered 230 planes from Boeing Co., which was the manufacturer's biggest order ever.

AirAsia will have a direct 49 percent stake in Metro Batavia Group, which owns Batavia Air, and AirAsia's Indonesian subsidiary PT Fersindo Nusaperkasa will own the remaining 51 percent to comply with Indonesia's foreign ownership rules.

Fernandez said the acquisition would be completed in the second quarter of next year and be paid for from AirAsia's cash pile.

Fersindo's President Director Dharmadi, who goes by one name, said the acquisition will increase AirAsia's Indonesian fleet from 21 aircraft to 54.

He said the enlarged airline will serve more than 14 million passengers or about 20 percent of the air travel market in Indonesia. It will fly to 42 Indonesian cities and 12 international destinations.

"Batavia Air needs a larger scale to compete and grow," said Yudiawan Tansari, who founded the airline in 2002 and owns 77 percent of its shares. "I believe that AirAsia will bring it to fly higher."