AirAsia group, through Philippines’ AirAsia (PAA), is widening its Filipino base by acquiring 49% of Manila-based budget carrierZest Airways Inc. and 100% of Asiawide Airways, confirming speculation of this move that first surfaced in September last year.
The Strategic Alliance Agreement inked on March 11 between PAA and Filipino-Chinese tycoon, Alfredo Yao, the majority shareholder of Zest Airways and Asiawide Airways (collectively the Zest Air Group), will give Zest Airways a 15% stake in the AirAsia Philippine unit.
The agreement also sees Yao subscribing to shares in PAA. To further strengthen this partnership PAA’s shareholders of will infuse funds to augment working capital. However, both parties did not disclose the cost of the deal. The agreement will also require various regulatory approvals.
PAA chief executive officer Marianne Hontiveros said the proposed alliance would complement the strategies of the airline, which operates out of Clark airport, for future growth.
“This will allow us to leverage on our respective strengths, which in the case of Zest Air include its operations out of the Ninoy Aquino International Airport that constitutes a majority of the air traffic in the Philippines, and a strong domestic network, which feeds into its current international routes.”
Hontiveros added that PAA’s investment in Zest Air also aligns with AirAsia group’s business strategy, which consists of existing operations in Malaysia, Thailand, Indonesia, Japan, the Philippines and, with India to come (read AirAsia India set to take flight in Q4).
The airline sees enormous growth potential in the Philippines with its population of over 100 million people across an archipelago of 7,000 islands, a landscape conducive to air transportation.
PAA started operations in the Philippines in 2012 from Clark airport. AirAsia group CEO Tan Sri Tony Fernandes owns 40% of the joint ventures while local businessmen Antonio O. Cojuangco, Michael L. Romero, Marianne Hontiveros each own 20%. It has services from Clark to Kuala Lumpur, Hong Kong, Singapore, Taipei and Kalibo and Davao in the Philippines.
Zest Airways, established in March 2008, operates with a fleet of 11 aircraft and flies to 14 domestic and 10 international destinations from its hubs in Manila, Kalibo and Cebu.
