Monday, 11 March 2013

Philippines’ AirAsia to acquire 49% stake in Zest Airways

KUALA LUMPUR: AirAsia Group is strengthening its presence in the Philippines in a strategic alliance with Philippines budget carrier Zest Airways.

Under the corporate exercise announced on Monday, Philippines AirAsia Inc. (PAA) is acquiring a 49% stake in Zest Airways and 100% of Asiawide Airways from Alfredo Yao. Yao is the majority shareholder of Zest Airways, Inc. and Asiawide Airways, Inc.

The agreement will see Yao subscribing to shares in PAA. However, this agreement would also require various regulatory approvals.

“To further strengthen this partnership, the shareholders of PAA will infuse funds to augment working capital,” according to the joint statement.

PAA chief executive officer Marianne Hontiveros said the proposed investment in the Zest Group would complement PAA's strategies for future growth. PAA currently operates out of Clark.

“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, which constitutes a majority of the air traffic in the Philippines, and a strong domestic network which feeds into its current international routes,” she said.

Below is the earlier report

KUALA LUMPUR: AirAsia Group is teaming up with Philippines's budget carrier Zest Airways to create a stronger player in the highly competitive Philippine aviation industry, a news report said.

The Philippines' Inquirer reported that AirAsia's Tan Sri Tony Fernandes, and ZestAir, led by the group of Filipino-Chinese tycoon Alfredo Yao, were moving toward a deal that would allow the Malaysian group to acquire at least 40% of ZestAir.

The Inquirer said Yao was expected to keep majority ownership of ZestAir but might cede management control of the airline in favour of AirAsia. The negotiations have reached an advanced stage toward the prospective airline alliance, said the report.

Under the Philippines law, foreigners cannot own more than 40% of certain industries like transportation, real estate and utilities.

AirAsia has a local affiliate that is majority-owned by Filipinos.

AirAsia earlier ventured into the Philippines through AirAsia Inc. in which Fernandes owns 40% while local businessmen Antonio Cojuangco Jr., Michael Romero and Marianne Hontiveros each own 20%.

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