Air Asia To Expand Philippine Affiliate

Will Invest $500 Million More

13 November 2014

After contracting operations in the Philippines due to heavy losses, Malaysia’s AirAsia Berhad is now ready to throw in more money in its fledgling affiliates as it consolidates Zest Air and Air Asia into one big airline Zest Air Asia which is awaiting congressional consolidation approval, its airline CEO said.

“We’ve put in $100 million already in cash terms, excluding the planes. And we are committing another $500 million once we get the franchise approval. That’s over a period of three to four years,” AirAsia founder Tony Fernandes said.

“As soon as we get the franchise, we should be able to get 15 aircraft. Then I hope we can add about five aircraft a year,” he adds.

Air Asia was forced to grow its capital base and reduced its Philippine operations by 30% as compared last year after registering consecutive losses since its inception. As of the first half of 2014 it continued to operate at a loss of $14 million.

Fernandes is however bullish of the airline subsidiary operating flatly in 2014 and registering profit by 1st half of next year as it put more air time to its existing A320 fleet.

AirAsia Philippines and AirAsia Zest currently operating as AirAsia Zest has 15 Airbus A320-200s operating out of Manila, Cebu and Kalibo. It has since abandoned its fabled hub at Clark International Airport due to poor passenger traffic.

Fernandes said that they cannot secure more flights to Korea and Japan without the regulatory issues in the Philippines resolved. The fleet would at least double once the group gets the go-ahead to consolidate domestic operations, Fernandes said.