AirAsia X to revive India and Europe routes

AirAsia X to revive India and Europe routes
Business & Markets 2013
Written by by Cynthia Blemin
Tuesday, 11 June 2013 10:19


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KUALA LUMPUR: AirAsia X Bhd, the long-haul arm of AIRASIA BHD [], will look into the possibility of reviving routes in Europe and India as it paves its way towards creating the world’s first global, multi-hub low-cost carrier (LCC) network.

AirAsia group chief executive Tan Sri Tony Fernandes said the routes were not feasible in the past due to high operational costs. “India has been phenomenal,

AirAsia X will go back to India,” he said at the launch of the AirAsia X prospectus yesterday.

The airline will have to wait for the necessary approvals from the Indian authorities, he said, without giving a clear indication of a timeline.

The soon to be operational AirAsia India, is a 49:30:21 joint venture among AirAsia, Tata Sons Ltd and Indian investor Arun Bhatia’s Telstra Tradeplace Pte Ltd.

AirAsia X axed flights to Mumbai and New Delhi on Jan 31 last year. It also discontinued flights to London in 2012, just three years after it started daily flights to Stansted. The Indian and London operations had resulted in the LCC dipping into the red in FY11 and the first half of FY12.

Meanwhile, AirAsia X CEO Azran Osman-Rani said the group expects to raise up to RM1.3 billion from its upcoming IPO and the proceeds will be used to repay bank borrowings and for capital expenditure. AirAsia X is expected to debut on the Main Market of Bursa Malaysia on July 10.

The gross proceeds from the public issue of up to RM859.3 million is based on the assumed institutional price and retail price of RM1.45 per share. Thecompany is offering a total of 790.1 million shares.

“AirAsia X and AirAsia Bhd are retail brands, which is something that should be leveraged to stimulate retail participation in the stock market,” said Azran, adding that the airline is expecting a double digit capacity growth with the delivery of a total of 28 planes by 2015.

AirAsia X currently serves 14 destinations across Asia, Australia and the Middle East, and operates a fleet of 10 A330-300s.

“We are looking to increase frequencies in our strong cities and open up new routes in future,” he said. The airline hopes to increase the frequency of flights to Sydney and Melbourne from once a day to twice a day. It is also looking at increasing its frequency for the Gold Coast route from five to seven times a week.

Azran said the airline is now awaiting regulatory approvals to fly to Adelaide, the capital of South Australia.

According to the prospectus, AirAsia X plans to use 44% of the proceeds to repay bank loans, with another 22% set aside for capital expenditure.

CIMB, Credit Suisse and Maybank have been appointed joint global coordinators on the IPO, with Barclays, BNP Paribas, Citigroup, CLSA, HSBC and Morgan Stanley also acting as joint bookrunners.


This article first appeared in The Edge Financial Daily, on June 11, 2013.