AirAsia's Fernandes bullish on PH market

Posted at 03/11/2013 4:57 PM | Updated as of 03/11/2013 6:41 PM
Zest Airways Chairman Donald Dee, AirAsia Group CEO Tony Fernandes, Philippines’ AirAsia CEO Maan Hontiveros, Zest Airways CEO Alfredo Yao, Philippines’ AirAsia Chairman Tony Boy Cojuangco, and Philippines’ AirAsia Vice Chairman Mikee Romero were at the Dusit Thani Hotel for the announcement of the strategic partnership of the two airlines. / Courtesy of Philippines' AirAsia Facebook page

MANILA, Philippines - AirAsia's Philippine unit on Monday said it acquired 49% of local budget carrier Zest Airways in a deal seen to strengthen AirAsia's foothold in the domestic market.

Tan Sri Tony Fernandes, chief executive officer of Malaysia's AirAsia Group, expressed confidence in the Philippine aviation industry. He dismissed some concerns about overcapacity in the local industry.

"The Philippine market is fairly small in comparison to what it should be and we should look at existing markets as this strategic partnership is all about growing market. I’ve been involved in the airline business in Thailand Malaysia, Indonesia and the Philippines has a lot, lot more growth, there is so much this country can offer to inbound tourists and Filipinos going overseas,” Fernandes said.

AirAsia and ZestAir called the partnership a "strategic alliance", not a merger.

Under the deal with juice magnate and Ambassador Alfredo Yao's ZestAir group, Philippines' AirAsia will acquire a 49% stake in Zest Airways and 100% in Asiawide Airways.

Yao, on the other hand, will take a 15% interest in Philippines' AirAsia. This will trim the stakes of the airline's Filipino shareholders Antonio “Tonyboy” Cojuangco Jr., Michael Romero and CEO Marianne Hontiveros to 15% each from a previous 20% each. Fernandes' AirAsia Investment Ltd will keep 40% of the Philippine unit.

Hontiveros says they have yet to disclose the amount of the deal.

She says AirAsia will still fly from Clark International Airport, while ZestAir from Ninoy Aquino International Airport. But she noted the two airlines can cross-sell and capitalize on each other's synergies. - With report from Lois Calderon, ANC