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AirAsia Seeks ME Investments

ABU DHABI — AirAsia X, the long-haul, low-cost wing of the Kuala Lumpur-based airline Air Asia, has initiated talks with the investors from Middle East including some of the sovereign wealth funds to sell an unspecified share of its equity to mobilise funds for its future expansion plans.

This was disclosed by Azran Osman Rani, the Chief Executive Officer of AirAsia X, at a Press conference here on Wednesday to announce the launch of the direct flight between Kuala Lumpur and Abu Dhabi from November 23. Initially, services will be available five days a week and later on a daily basis.

“Our present equity base will sustain our expansion plans up to 2010 only. We will have to inject more equity to carry out further expansions. We haven’t decided what portion of the equity will have to be sold. It is for our shareholders to decide. Also it is for them to invite private investors to join or go for IPO or opt for other routes to mobilise funds,” he said.

“We already have investors from the Middle East as investors in our company. About 10 per cent of our shares are being held by a financial consortiumfrom Bahrain,” he said.

The Ambassador of Malaysia in the UAE Dato Yahay bin Abdul Jabar, who was also present at the Press conference, later told Khaleej Times that he was encouraging the AirAsia X and the investors in the United Arab Emirates to explore the possibilities of launching a joint venture to set up a low-cost carrier in Abu Dhabi.

The other emirates like Dubai and Sharjah already have low cost carriers, he recalled.

Considered to be the leading low cost carrier in Asia, Air Asia services the extensive network of 130 routes, covering 6 destinations.

The airline has carried over 75 million passengers and have grown its fleet strength from two to 83, since its inception seven years ago. Air Asia X had only one aircraft when it was launched last year, and now we have five aircraft,” Azran Osman Rani said.“We are set to roughly triple our revenues in 2009 compared to 2008. Last year, we had a revenue of about Ringgits215 million (roughly Dh215 million), and this year we will be making Ringgits 950 million. We will have eight planes by the end of the year, and by the end of 2011 we will have 17 aircraft.”

The airline had a load factor of 75 per cent last year and hopes to achieve 80 per cent this year.

Abu Dhabi has been selected as the virtual hub of the Air Asia X in the Middle East because it can act as the gateway to the region.

“We are not merely targeting the to and fro passengers between Abu Dhabi and Kuala Lumpur. But both these destinations will be treated as transit points also for travels beyond to other countries in the regions and outside.

Also there are developments happening in Abu Dhabi which in future will elevate it to the status of major global tourism destination, the Chief Executive Officer said. Air Asia X will be the 48^th carrier operating from Abu Dhabi.

ramavarman@khaleejtimes.ae