AirAsia banks on the Philippines for growth

Budget carrier AirAsia on Monday said it was banking on the Philippines to drive its growth given the country's “tourism potential,” with plans to launch flights to the United States by next year.

In a hybrid briefing, Capital A Berhad Chief Executive Officer Tony Fernandes said the firm was looking to establish the Philippines as a hub as the carrier looked to expand its route structure.

“In ASEAN, we really want to grow Indonesia and Philippines. We think the tourism potential in both those countries are huge obviously — Indonesia has 300 million people, and Philippines has close to a hundred million people,” he said.

“We would really love a license in Vietnam and Singapore, but that’s not achievable right now. So really, our growth is going to be very heavily driven by Philippines and Indonesia on top of Malaysia and Thailand, which has a lot of growth,” he added.

Capital A is an investment holding company which owns AirAsia Berhad or AirAsia Malaysia, and AirAsia Aviation Group Limited, which counts as subsidiaries AirAsia operates in the Philippines, Cambodia, Indonesia, Thailand.

In the same briefing, Fernandes said Capital A entered a non-binding letter of offer for the disposal of its aviation businesses — AirAsia Berhad and AirAsia Aviation Group Limited — to AirAsia X Berhad (AAX).

“[W]e are strategically pursuing the sale of the aviation business to AAX to create an aviation pure player, consolidating both long and short-haul airlines under the AirAsia brand, subject to the negotiation of a definitive share sale and purchase agreement and its completion,” he said in a separate statement.

“Following the disposal, the aviation business is poised to benefit from focused management and a well-defined strategic direction, which will boost the aviation business’s capacity to seize growth opportunities, expand market share, and ultimately achieve enhanced profitability,” he added.

Capital A, aside from aviation, is also involved in logistics (Teleport); maintenance, repair, and overhaul, and inflight services (Capital A Aviation Services); and MOVE digital.

Meanwhile, AAX is a medium to long-haul airline which operates primarily in the Asia-Pacific region. It serves Seoul, South Korea, and Delhi, India, among others, with plans to reopen more destinations.

Fernandes declined to elaborate on the valuation of the transaction but said they expected the sale to be completed in the next five months, which will conclude with the merger of all the aviation businesses into one unit under AAX.

“It gives us much more flexibility in Indonesia, Philippines, Malaysia, Thailand to have much more exciting route structure. So, to investors, now you are getting an airline that is like Emirates in Qatar,” Fernandes said.

“It has wide-body and narrow-body, you don’t need to differentiate which is long-range. It really makes complete sense to merge the two airlines and have a very powerful network that you can fly,” he added.

AirAsia on Monday also announced two key leadership appointments — Datuk Captain Chester Voo as deputy group chief executive officer leading airline operations, and Farouk Kamal as deputy group chief executive officer leading the corporate sector.

Voo is set to focus on optimizing and enhancing efficiencies across core airline functions, while Kamal will take responsibility for corporate functions covering finance, aircraft leasing, legal, investor relations, and strategy.

“As we enter a new era, these leadership appointments signify a significant milestone in the airline’s evolution, steering AirAsia through an era of digital transformation, innovation, and sustainable growth,” AirAsia Aviation Group chief executive officer Bo Lingam said.

“Both of their combined efforts will allow us to continue our dedicated focus on our strategic decision-making, long-term planning, and overall organizational direction for the group. The synergy between the seasoned leaders and the existing team is expected to fuel further innovation and drive us toward continued success,” he added. — DVM, GMA Integrated News