Indonesia Billionaires

By Eric Bellman - The wall street Journal

Indonesia now has more billionaires than Japan, as Southeast Asia’s largest economy’s expanding middle class continues to ignore the global economic slowdown and shop, pushing up the value of the companies that sell them new stuff and services.

Forbes Indonesia’s latest list of the country’s richest people, released this week, sets its billionaire tally at a record 32 people and families, edging out Japan, which Forbes says is home to 28 billionaires. Last year Indonesia had 26 billionaires, according to Forbes’ calculations.

While the archipelago’s crowd of coal magnates was hit hard by a plunge in coal prices, the commodities collapse was more than offset by the growing wealth of the people behind the country’s top retail, media, banking, food and tobacco companies.

“The thing that really stands out is that the money of those that produce something for the middle class has been rising while those that made money mostly from commodities went down” in ranking, said Justin Doebele, chief editorial adviser of Forbes Indonesia.

Topping the ranks were R. Budi and Michael Hartono, worth $15 billion thanks largely to their holdings in Bank Central Asia. Also in the top five was Anthony Salim and family ($5.2 billion), who are behind the world’s largest instant noodle company, Indofood.

Newcomers included mall and property developer Alexander Tedja ($790 million) and snack manufacturer Garudafood’s Suhamek ($760 million). The poorest rich man on the list was newbie Eddy Kusnadi Sariaatmadja ($730 million), who made his money selling computers and now manages television stations.

Many of the country’s coal barons got burned this year. Banyan Resources’ Low Tuck Kwong saw his worth slip by close to half to around $2 billion, according to Forbes, while presidential hopeful Aburizal Bakrie and his family fell off the list entirely, as falling coal prices and a boardroom battle over control of their London-listed company Bumi PLC BUMI.LN -4.85%slammed the value of their assets.

While a lack of public disclosure can make it difficult to estimate exact wealth, Indonesia’s bulging batch of billionaires shows that family fortunes have been largely protected across the archipelago even as most of the world struggles with a slowdown.

And though Indonesia’s billionaires club is still smaller than the ranks in China (more than 100 billionaires) and India (more than 50 billionaires), with less than one-fourth the population of China and India, it has more billionaires per capita.

Indonesia expects its gross domestic product to expand more than 6% this year as well as next year. It has been attracting a record amount of foreign direct investment as companies including Toyota Motor Corp. 7203.TO +0.98%, Nestlé SA and General Electric Co. GE +1.26% have been ramping up their capacities in the country to better target its emerging consumers.

Indeed, many countries in Southeast Asia have been shining while the rest of the world slumps. The region is now home to the world’s richest country by some measures – Singapore – and hundreds of thousands of new millionaires.

Malaysia Billionaire:

Indonesia is attracting lots of Foreign Direct Investment (FDI), inclulde Air Asia HQ has been moved to Indonesia.

Air Asia the biggest and Largest airline in China

By The Star

AirAsia has added Kunming, the southwestern capital of Yunnan Province, as a new destination to strengthen its existing 23-route network in China.

The new route, which takes off from Kuala Lumpur, will commence operations on Dec 10 with weekly flights on alternate days Monday to Sunday.

A promotional all-in fare of RM88 onwards one way is good for booking from today until Oct 27.

“According to the Centre for Asia Pacific Aviation (CAPA), AirAsia is the largest foreign airline in China at the moment, and we will continue to work hard to maintain this,” AirAsia Bhd chief executive officer Aireen Omar said at a press conference yesterday.

Over the last few years, AirAsia has been reaching into second-tier cities in China, a move that has yielded promising results for the low-cost airline.

“The Chinese truly appreciate it. Diving is getting increasingly popular there and they yearn for beach holidays at East Malaysia and east coast of the peninsular,” AirAsia commercial director Jasmine Lee said.

“Our flights from China give them easy access to out hot spots.”

Likewise, a cooler climate and notable attractions such as UNESCO World Heritage-listed sites Naigu Stone Forest and Suogeyi Village in Kunming are expected to appeal to Malaysians.

Recently, AirAsia announced three other routes Bangkok-Wuhan, Bangkok-Xian and Kuala Lumpur-Nanning, which flies on alternate days Tuesday to Saturday.

Fast-selling tickets were another motivating factor for the airline company to fly into Kunming; Nanning, being a popular business destination for Malaysians, would encourage passengers to connect via Kunming for sight-seeing.

With just four weekly flights to the new destination, impact on earnings is expected to be insignificant.

“Rather, it is the overall frequency and many routes into China that matter. Our audience there makes up half of our top 20 most profitable flights,” she said.

In conjunction with the new destination, AirAsia's flights to other cities in China are bookable from November to January for all-in fares starting from RM199.

The new route to Kunming will be operated on AirAsia's Airbus A320 with a capacity of 180 seats.

Tony Fernandes will over see the Air Asia Group

By Business Times (Koi Kye Lee)

AirAsia Malaysia's new chief executive officer (CEO) will take the airline into another league, said AirAsia Group CEO Tan Sri Tony Fernandes.

"I am very excited by the announcement and it shows the progressive nature of AirAsia and I think when this person is announced, you can see their career and how far they have come," he told reporters yesterday after witnessing the signing of a Facilitation Fund Grant agreement between Epsom College and the Public-Private Partnership Unit (UKAS) in the Prime Minister's Department.

"Actually, I am dying to announce the name but I have got to keep quiet, so come Monday, I will tell you and I think it is going to be a good day for corporate Malaysia in many ways," Fernandes said.
AirAsia is currently in the process of restructuring its management to accommodate the shift in emphasis on its future growth plans.

It was recently reported that Fernandes will be announcing the key personnel to run the regional structure as well as new AirAsia Malaysia CEO on Monday (June 18).

Business Times reported last week, quoting Fernandes, that the new CEO will be managing the operations in Malaysia, while he will be overseeing all AirAsia operations in Malaysia, the Philippines, Thailand, Indonesia and Japan.

MAS able to become profitable again with oneworld member?

By The Star

By year-end Malaysia Airlines (MAS) would have become a full member of the oneworld alliance and would be able to offer connectivity to about 800 destinations in 150 countries by riding on an expanded oneworld network.

“This membership will be among the significant catalysts that will complement our efforts to win back customers and become a profitable preferred premium carrier as outlined in our Business Plan,'' said MAS group chief executive officer Ahmad Jauhari Yahya.

Jauhari said the entry into oneworld would enhance its network considerably while providing baseload demand from fellow oneworld members.

“The prospect of being able to offer improved global coverage and connectivity through an expanded network of great airlines to MAS guests is indeed very exciting. Our customers, in particular members of our Enrich loyalty programme, will benefit from increased rewards and recognition while enjoying more seamless air travel options “We look forward to our full membership that will improve our brand awareness among the alliance members' customers and enhance our load factors through additional partner traffic,'' Jauhari said when witnessing the entry of airberlin into oneworld on Tuesday.

Airberlin now serves 162 destinations in 40 countries with a fleet of 170 aircraft and a workforce of 9,200 employees and it became part of oneworld, adding the second biggest airline in Germany and the sixth biggest in the European continent overall to the airline alliance. Austria's NIKI, also a member of the airberlin group, joined oneworld as an affiliate member at the same time.

Other oneworld members include American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Qantas, Royal Jordanian and S7 Airlines, as well as 20 affiliates including Austria's NIKI, American Eagle, Dragonair, LAN Argentina, LAN Ecuador and LAN Peru.

Malaysia Billionaire:

Oneworld is just a platform that convenience the internet users to book their air tickets, where you are able to garner all the flight information across the globe provided the participant airliner is a members. I personally think it would not make sure impact on MAS profits.

Does MAS payout bonuses to employees in this time around?

By The Star

It is about time Malaysia Airlines (MAS) is sold, and some have even suggested that it be sold for a ringgit.

Those who love MAS will fight tooth and nail to keep it but the reality is, selling it may just be an option to hopefully end its woes.

A decade ago, Tan Sri Tony Fernandes and his buddy Datuk Kamarudin Meranun paid a ringgit to buy AirAsia, which had two aircraft. They also took on RM40mil of the debts.

After seven months of operations, AirAsia managed to repay all its debts and made a profit of RM19.4mil.

That is history, but today, AirAsia has over 100 aircraft, operations in Thailand and Indonesia, and these two companies are slated for a listing this year. Japan, Philippines and even the Middle East are AirAsia's playgrounds and its cost is the lowest in the world because it is run by two entrepreneurs who are constantly thinking of how to rev up profits.

That is what MAS needs, not just cuts.

MAS has been through enough shake-ups, cost cuts and route cuts to be profitable but yet it falls into the red. The question is, will all the cuts this time around save the airline?

Will MAS be profitable and how profitable can it get?

On Thursday, MAS again shocked the market with a RM2.5bil net loss for full year 2011 and some of its own employees were dumbfounded with the figure.

The loss included a RM1.09bil provision, which was a non-cash item.

If you strip out the provision, the actual loss is about RM1.4bil. The provision is an accounting treatment which some analysts refer to as “kitchen sinking.''

Whether that kind of provision is necessary is up to the new team. But by so doing, it is taking the hit all at one go, so that when things improve, it can show profit. Whatever, they should know what they are doing.

Coming back to the point of selling the airline - of course there is also the contratrian view, since the airline was privatised before and had to rescued by the Government a decade ago. So why sell again?

The issue here is about positioning and for now MAS is often referred to by players as a second tier premium carrier whilst rival Singapore Airlines (SIA) is the first tier, and best in class.

The question ahead is also about survival in a highly competitive climate where even the biggest of players are merging and forming alliances and some have gone into arming themselves with both the premium and low cost suite of services to serve different market segments.

Take the example of SIA, it has both the low cost and premium products via its units, so has Thai Airways International, ANA, Qantas and even Japan Airlines.

SIA offers short/long haul premium services, value via Silk Air, short haul low cost via Tiger Airways and soon, long haul low cost via Scoot.

The share swap between MAS and AirAsia owners does limit competition and the collaboration is supposed to help the airlines work on many areas but it is nothing like having one big company that serves all market segments like SIA.

And how many more restructuring MAS needs to ensure it does not slip off route again.

We should be open about letting entrepreneurs run the show.

For a long time, MAS and Proton were two companies with big problems and were bleeding as they were seen to be “not competitive enough.''

After much resistance, the Government has finally sold Proton to DRB-Hicom, and now it is up to DRB-Hicom to prove that Proton is worthy of the purchase.

It also stops the possible public outcry that public funds are used to rescue companies.

Like it or not, Proton and MAS has to be run like private companies and those who call the shots should consider selling MAS.

Be it Fernandes or Kamarudin, they are in the business and MAS needs the “entrepreneurial push and mentality of making money.''

In the final analysis, we need a stronger and bigger Malaysian airline, not just a premium airline. That is food for thought.

* I bet all MAS employee are jst shaking their legs with nothing much work to do. I wonder do MAS payout bonuses to their employee?

Swapping of shares, it's a win-win situation for Air Asia and MAS

By The Star

AirAsia X (AAX) seems all set to start ticket sales for the much-awaited KL-Sydney route next week and will begin mounting flights to the Australian city by April this year, way ahead of rival Scoot.

The airline is also said to be in the final stages of rationalising its route network where it would cut some routes which it deemed to be unprofitable and add Sydney and some routes to China (provided it can get slots there) to its network.

“We want to do that (Sydney) well ahead of the competition,'' said a senior official of the airline group.

Scoot is Singapore Airlines' long-haul low-cost carrier that has named Sydney as the first city of call out of Singapore and plans to begin flying the route by mid-year.

The official declined to elaborate, but market has it that AAX will begin selling tickets for the sector next Tuesday and a team is planning to launch the sales from Sydney.

The first flight is slated to take off on April 1. However, all is subject to its internal planning, though the airline may be looking at daily flights for the KL-Sydney sector.

This puts an end to the near three-year wait and a bitter fight with Malaysia Airlines (MAS) over the route. MAS had previously lobbied against competition and the national carrier is still the only airline serving the KL-Sydney route after Jetstar withdrew from the sector in 2009.

This sharing of routes has been made possible after a share-swap agreement between AAX's sister company AirAsia and MAS on Aug 8 last year and both will collaborate rather than compete.

Currently, MAS flies twice daily from KL to Sydney and whether MAS will reduce the frequency to once daily and make way for AAX to take on the other slot is unclear.

“Choices and reasonable fares are what a traveller wants. But the biggest fear for travellers over the collaboration is the lack of competition and that is seen by the fare pricing for the Dehli/Mumbai sectors where the fares offered by AAX are somewhat close to that offered by MAS,'' said an industry source.

To be fair, AAX does offer reasonable rates for its Melbourne, Perth and Gold Coast flights and if the booking is made in advance, the savings can be up to 40% of the full-service fares. The airline is currently offering a 20% discount on its base fares for all its routes for a limited period.

Asked on the strategy for the KL-Sydney route, the official said:“We would offer lots of low fares and as we are already well known in Australia it should be (fairly easy to fill up our aircraft).''

Interestingly, those in the know claim that AAX is close to finalising details on whether to exit from the Indian (New Dehli, Mumbai), European (London and Paris) and Christchurch routes.

Sources said both MAS and AAX had had several meetings over the matter so that MAS could take over all the slots from AAX for the routes and carry AAX passengers that have booked seats with the airline.

The date for axing the route is said to be as early as February. AAX has, however, repeatedly said that “no decision on routes, whether to add new ones or cancel new ones'' had been made.

But those in the know claim that “all this adding and axing of routes is part of the understanding under the collaboration.'' Looking from the collaboration perspective, moving out of the European/India/Christchurch routes is seen as a compromise to get Sydney and some China routes.

MAS CEO Ahmad Jauhari Yahya in his executive summary of his business plan said that “we are close to finalising a connecting-service that will enable passengers on either airline to seamlessly connect between carriers and non-overlapping routes.”

Separately on Tuesday, AirAsia boss Tan Sri Tony Fernandes tweeted: “With all that's going on, we will need to get more planes. I will be speaking to the board. The growth in the low-cost arena is very exciting.''

Last Friday he was quoted in Paris as saying: “AirAsia will consider buying up to 25 Airbus A320 aircraft. Our growth will probably exceed the aircraft that we have right now, and the initial public offerings of AirAsia's units in Thailand and Indonesia will give us the ability to probably take more aircraft.''

*MB: Afterall the swapping of share between Air asia and MAS would be a win win situation. Closing some routes and compromising some routes between the two airlines, a total win-win that sets our airline industry even stronger in the international arena. What's the shout all about by the Union previously? Bunch of dumbnuts who cant foreseen the future.

MAS, AirAsia share swap

By Jahabar Sadiq(Malaysia Insider)

The surprise share swap between Malaysia Airlines (MAS) and budget carrier AirAsia Bhd is slated to be sealed tomorrow in a deal that will allow Tan Sri Tony Fernandes to step in and pilot the ailing state-owned airline back to profitability.

The Malaysian Insider understands that the share swap will likely see a change in leadership with a new chief executive to replace Tengku Datuk Azmil Zahruddin, who took the job almost two years ago from Datuk Seri Idris Jala who is minister leading Malaysia’s economic transformation.

“There is a slew of meetings today to dot the i’s and cross the t’s but it’s done and has the blessings of Putrajaya,” a government source said, referring to the office of Prime Minister Datuk Seri Najib Razak, who is chairman of MAS’s ultimate owner, Khazanah Nasional Berhad.

Under the deal, Fernandes and his Tune Air Sdn Bhd partner Datuk Kamarudin Meranun are expected to swap a portion of their AirAsia shares for 20 per cent of Khazanah’s stake in MAS.

The state asset manager’s wholly-owned unit Penerbangan Malaysia Bhd (PMB) owns 69 per cent of MAS after the wide asset unbundling (WAU) restructuring programme carried out in 2002 by boutique consultancy BinaFikir. BinaFikir’s then boss Tan Sri Azman Mokhtar is now managing director of Khazanah.

Another BinaFikir consultant in the WAU, Mohd Rashdan Mohd Yusof, is Khazanah’s representative on the MAS board and was thought to be a potential chief operating officer after the share swap but sources say an outsider is likely to get the job.

“Most of the people in the MAS board are either bankers or accountants. What is needed is a person with airline experience,” an industry source said, pointing out that Fernandes himself is an accountant but has 10 years’ experience turning AirAsia into Asia’s largest budget carrier.

“Most of the past solutions for MAS, either the WAU or Jala’s business transformation plan, were financial in nature to keep the airline in the black. But what is needed are operational fixes,” he added.

The flag carrier recorded a first-quarter net loss of RM242.3 million against a profit of RM310.6 million in the same period a year ago. Tengku Azmil took over the reins of the company on August 28, 2009 from Jala.

Analysts expect the flag airline to make full-year operating losses for its current financial year ending December 31, in line with higher fuel costs and falling yields. Its sales director Datuk Bernard Francis recently resigned within 24 hours despite having a few more months in his contract.

MAS recently named former managing director Tan Sri Md Nor Md Yusof as its non-executive chairman from August 1, replacing long-serving chairman Tan Sri Dr Munir Majid.

Md Nor managed the airline between 2001 and 2004 where he implemented the WAU restructuring of MAS in 2002, involving uncoupling the airline’s massive debts and transferring of the MAS fleet to PMB.

Khazanah said yesterday it remain the biggest shareholder in MAS, following reports of the share swap. It did not deny the share swap but said it will make an announcement about the flag carrier’s transformation plan at an appropriate time.

“The aviation sector is a strategic sector to the economy and MAS remains a core holding in Khazanah Nasional Berhad’s portfolio. Khazanah will continue to maintain its position as the single largest shareholder in MAS,” the statement said.

Both Fernandes and Kamarudin also issued a statement denying that they will be the largest single shareholder in MAS but they did not deny news of the share swap.

The Malaysian Insider has reported that the share swap will ensure MAS reclaims its premier airline status while long-haul budget carrier AirAsia X will serve the low-cost market sector.

It will also lead to both carriers rationalising domestic routes and leave MAS subsidiary Firefly to only operate turbo-prop operations from the Skypark in Subang.

Malaysia Billionaire: Can the govt find some expertise for the stupid Proton so that it wont waste out tax payer money and impost heavy tax-duty on imported cars.

How to do business like Air Asia?

By the Star

AirAsia X’s latest fleet purchase has raised concerns among analysts that it is following the high debt-leverage route of AirAsia Bhd, expanding the risks to its bankers.

The long-haul, low-cost airline company’s CEO, Azran Osman-Rani, said there was a fundamental difference between the business model of AirAsia X and that of traditional airlines.

“For AirAsia X, most of its tickets are sold through the Internet and bought by customers months before their flights.
“As for traditional airlines, tickets are mainly bought through agents and paid by customers just two weeks before the flights.

“The agents may even pay the airlines after the flights,” he told StarBiz in a telephone interview yesterday. The airline has a similar business model as AirAsia as both are low-cost carriers.

“We have forward cash. In this business, what is important is cashflow. We’re holding the forward cash,” he added.

It was announced on Tuesday that AirAsia X placed a firm order for 10 Airbus A350 aircraft which carried a list price of US$2.2bil.

This follows an earlier order for 25 Airbus A330 planes for delivery between last year and 2015.

On the company’s debt leverage, he said AirAsia X’s gearing was about 200% and was not expected to increase.

The 10 planes in the latest order will only be delivered from 2016.

“It’s not like we’re buying all the planes at the same time. But it is important to place the deposits now. This is to ensure we’ll have the delivery slots. The deposit is just US$10mil, we’re not paying US$2.2bil yet,” he added.

Progressive payments will start 36 months from delivery but the bulk of payments will be made when the planes are delivered.

By the time the A350 planes are delivered from 2016, most of the borrowings taken for the A330 planes would have been repaid.

Azran said some equity analysts did not understand AirAsia X’s business model, but that was not important.

“What is important is what the banks do. If the banks are worried with our gearing, wouldn’t they be the first to run away?

“But the banks are saying they’ll fund all our deliveries this year,” he said.

AirAsia X will take delivery of three Airbus A330 planes between September and December. Financing has been obtained for these planes.

Currently, the airline flies five planes to London, Melbourne, Perth and Gold Coast (Australia), and Tianjin and Hangzhou in China.

Its most profitable routes are Gold Coast and Hangzhou because these were the first two routes flown by the airline.

“They’re more matured markets for us than London or Melbourne. It’ll take us a year to build brand awareness for the newer routes and, initially, the pricing has to be aggressive,” he said.

*Air asia set a very gd example of a business model, if any business woudl adapt/copy this model, it would surely be a thriving business. Invest in branding/advertising your promotion, cut off agents and orders are made from on9. Consumer trust is there as it is a gd brand and they would place orders in early stage with payments made, this would allow the business to collect forward cash. Its a win win stituation as consumer gets a gd discount and the company gets to secure the deal with forward cash. Think abt it, any industry can adopt this strategy! hehe..

Air asia X raising fund again.

By the star

AirAsia X is looking at a capital-raising exercise via an initial public offering (IPO) or a private placement to raise funds for future aircraft purchases.

The airline wants to add the Airbus A350 XWB wide-body aircraft to its fleet but any firm order will only be made after the manufacturer is able to firm up delivery dates.

“This year is a watershed year for us in terms of profitability. Our equity value has increased and so have our intangibles. This opens up avenues for equity funding and, in the long term, an IPO or even a private placement is possible,” chief executive officer Azran Osman-Rani told StarBiz.

“It will be when the equity markets turn around and this could be in 2010. Our equity value gives us more capital-raising capabilities and our audited results will have a very compelling story to tell,’’ he said.

It is learnt that investment bankers are already crunching numbers for the airline’s IPO but Azran laughed it off when asked to elaborate.

The last time AirAsia X placed out shares was at the end of 2007/early 2008, to British billionaire Sir Richard Branson, Japanese leasing firm Orix Corp and Bahrain-based Manara Consortium, to raise funds to start up its operations.

AirAsia X is confident of turning in net profit of RM150mil to RM200mil for the current year ending Dec 31 on revenue of about RM1bil. With this revenue, Azran said, the company would join the ranks of many firms making up the KL Composite Index.

The income will come mainly from its mature routes, such as Gold Coast and Hangzhou, and its profit margins are 20% to 30%. Its cost is low at 2.8 US cents per available seat kilometre and, despite the global slowdown and a slump in air travel, Azran said the airline enjoyed load factors of 75% for the first three months of 2009. For 2008, it was 77%.

Its recently launched London route will only be profitable in a year.

To order new aircraft requires a deposit. “We would be in a position next year (for that). We will have more capital for the deposit,’’ Azran said, adding that he was looking at 25 to 50 A350s as “our’s is an even bigger story going forward’’ and expansion of long and medium-haul routes would be its thrust going forward.

Since flying to London, it has had several US airports knocking on its doors. For Azran, it will be either New York or Los Angeles. The airline would be ready “as early as July’’ to ply the transatlantic route, especially New York, he said, provided it obtained the rights. If not, it should be later this year or 2010.

That should come with a stopover in London but a direct flight is Azran’s dream, which can only be achieved with a long-range aircraft, thus the need for the A350.

A highly-efficient, medium-capacity and long-range aircraft, the A350 is expected to take to the air in 2013. Thus far, Airbus has received over 400 orders.

“We are in extensive discussions with the manufacturer but it is no point placing an order now as the maker cannot firm the delivery dates. We want to see sufficient development to the A350 assembly line, then there will be certainty to commit,’’ he said.

The aircraft will be used to ply the American and African continents, Russia and eastern Europe. The existing A330 and A340 will be used for new routes to Sydney, the Middle East and part of its expansion into Asia.

“This (order of 25 to 50 aircraft) is nothing, look at what other airlines, such as Qatar Airways, are ordering – 100 planes at one go! By going into long-haul markets, AirAsia X will be competing with the bigger boys in the industry and it needs a fleet size to support that route expansion,’’ Azran said.

* With many China's route they are tapping into and with help from our Malaysia transport ministry tapping into India's market. Do u think Air Asia X will make it? What's the PEST or SWOT analysis of Air Asia X? If is viable, i think many ppl will be queuing up to get a share of Air Asia X.

Air Asia is betting high, take note share holders

By Biz Times

AIRASIA, the region's biggest budget carrier, is making a risky bet.

As soaring fuel prices have forced other airlines to cut back, shed jobs and ground planes, AirAsia is doing the opposite: increasing flights, adding routes and boosting capital investment.
Last month, it even gave away a million free seats (although passengers still had to pay taxes and fuel surcharges). The seven-year-old company is aiming to fill the vacuum as other airlines reduce capacity, betting that more travellers will opt for budget flights amid a global economic downturn.

Analysts say if it survives the industry slump, AirAsia could come out a winner with increased customer loyalty and a strong route network to catch the growth wave when good times return.
"They are reasonably well-positioned for the long run, but there's always a trade-off. It's a long-term decision, which will cause some short-term pain," said Damien Horth, Asia transport analyst at UBS AG in Hong Kong.

Of course, the strategy could also backfire badly.

Last month, AirAsia reported a 95 per cent plunge in its net profit for April-June quarter to RM9.42 million. But the company chalked that up mostly to a RM77 million foreign exchange loss from a weakened ringgit, not weakness in its underlying business.
Average load factor - the percentage of seats taken up in an airplane - dipped to a still relatively strong 76 per cent, from 80 per cent in 2007.

It has a cash reserve of about RM1 billion, but outstanding debts stand at RM5.4 billion, giving it a net debt position of RM4.4 billion. Debts are set to grow as it receives new planes.

Chris Eng, analyst with OSK Securities in Malaysia, said AirAsia's growth prospects may be curbed, while its joint ventures in Thailand and Indonesia are expected to remain in the red.
"It will be challenging but we believe AirAsia can survive," Eng said, citing its efficient regional network and good cost control.

Air Asia: People will still want to fly

By Biz Times

BUDGET carrier AirAsia Bhd expects to resolve any outstanding issues it has over the Low-Cost Carrier Terminal (LCCT) charges in two weeks.Group chief executive officer Datuk Seri Tony Fernandes said he met with Malaysia Airports Holdings Bhd (MAHB) managing director Datuk Seri Bashir Ahmad on Monday to discuss the amount it owes the airport operator."I am optimistic that we can resolve this because it was a meeting of minds... the issue with MAHB is coming to an end," he said, but did not elaborate.Fernandes was speaking to reporters at the inaugural session of investPenang's "The CEO Speaks" series in Penang yesterday.

Fernandes presented a talk on "Branding: Jazzing Up Your Business", which was launched by Penang Chief Minister Lim Guan Eng.AirAsia is disputing the amount it owes MAHB because it believes that charges at the LCCT should be lower than the KL International Airport's main terminal.It was reported that the actual amount accumulated since 2002 varies from the RM60 million mentioned in some reports to up to RM110 million as reported in Parliament.The matter was reported to have been brought to the Finance Ministry to resolve."It is a bonus for us to clear that," Fernandes said, adding that the low-cost carrier business is a new one and therefore took a little longer for various parties to understand its operating concept.

Asked whether AirAsia is planning to settle its debts with MAHB, Fernandes said: "We have resolved whatever historical issues which are outstanding and will need further discussions on the future."On the business outlook for AirAsia amid rising fuel costs, Fernandes said: "Despite 24 airlines around the world going bust, I am optimistic that people will still want to fly and we will continue doing what we are doing and ride through the storm."

AirAsia jumps most in 3 years

By Biz Times

AIRASIA Bhd, Southeast Asia’s largest low-cost carrier, jumped the most in more than three years in Kuala Lumpur trading, leading airlines higher, after the price of oil fell to a six-week low.The carrier rose 8.7 per cent to RM1 at 1.30 pm. Qantas Airways Ltd gained 5.6 per cent to A$3.58 in Sydney. China Southern Airlines Co, Asia’s biggest carrier by passenger numbers, surged 10 per cent to HK$3.43 in Hong Kong.Oil fell to US$127.95 a barrel yesterday in New York, down almost US$20 from July 14’s record close, on forecasts that Hurricane Dolly would miss oilfields in the Gulf of Mexico. Lower oil prices help airlines by cutting the cost of jet fuel, most Asian carriers’ biggest expense.“The drop in crude oil prices is definitely driving gains in airlines today,” said Um Kyung A, a Seoul-based analyst at Shinyoung Securities Co. “Still, there’s long way to go for airlines to turn profitable.”

Korean Air Lines Co, South Korea’s largest carrier, gained 5.4 per cent to 47,900 won in Seoul. Air New Zealand Ltd rose 7 per cent to NZ$1.23 in Wellington. Malaysian Airline System Bhd, the country’s national carrier, jumped 4.8 per cent to RM3.50 in Kuala Lumpur.In Hong Kong, Cathay Pacific Airways Ltd, the city’s biggest carrier, gained 5.2 per cent to HK$15.48. Air China Ltd, the world’s biggest airline by market value, climbed 5.4 per cent HK$4.49. Singapore Airlines Ltd rose 3.4 per cent to S$15.78 in Singapore.Airlines PlungeAirAsia has plummeted 38 per cent this year amid concerns that a near doubling of jet-fuel prices and a weaker ringgit will crimp earnings. The Bloomberg Asia Pacific Airlines Index, which tracks 17 airline stocks, has plunged 39 per cent.Surging fuel prices have forced airlines across Asia to raise surcharges, cut services and ground planes in a bid to defend profits. Qantas said last week it would axe 1,500 jobs worldwide, cancel plans to hire new staff and ground as many as 22 aircraft. Korean Air expects to post a second-quarter operating loss, president Lee Jong Hee said on July 17.The price of jet fuel rose 0.5 per cent to US$165.20 a barrel yesterday in Singapore. That’s 9.2 per cent lower than July 3’s record close of US$181.85. - Bloomberg

AirAsia to take only profitable routes

By The Edge

Neither AirAsia Bhd nor its associate AirAsia X is jumping in at the chance of taking over all the unprofitable international routes that Malaysian Airline System Bhd (MAS) has given up in the last two years because some of those routes do not make commercial sense.

"We apply for routes that make sense to us, where we believe we can create new markets and offer consumers choice. It does not make sense to have our strategy being dictated by another airline's failures," AirAsia X chief executive officer Azran Osman-Rani told The Edge Financial Daily .

AirAsia X is the long haul budget carrier of AirAsia. He added that it also did not make sense to stop AirAsia X from flying on overlapping routes when foreign airlines were allowed to compete directly with MAS.

Azran was responding to comments by Transport Minister Datuk Ong Tee Keat that AirAsia was "welcomed" to apply for those routes cut by MAS.

Ong told the Dewan Rakyat in a parliament session yesterday that it was up to AirAsia to apply to take over the routes before the requests could be considered.

Those international routes deemed unprofitable by MAS include the Kuala Lumpur-Manchester, KL-Vienna, KL-Nagoya, KL-Xi'an, KL-Kolkata, KL-Padang, KL-Ahmedabad as well as Kuching-Perth, Kuching-Sydney, Langkawi-London and Penang-London flights.

Azran said except for the KL-London route, other European routes were not commercially viable, as its planes to be used for ultra-long haul destinations would not have enough seats to make those routes profitable.

It plans to use an Airbus 340 plane, which would have 390 seats for the KL-London route, which is expected to start commercial service early next year.

"What we want is trunk routes such as Sydney, Melbourne, New Delhi, Mumbai, Tokyo, Shanghai and Beijing, not those non-trunk routes that MAS has abandoned," Azran added.

He said it was vital to enable AirAsia to connect passengers on those trunk routes in order not to lose out to its low cost competitors such as Jetstar and Tiger Airways that were aggressively expanding their networks.

"Competition is biting at our heels. The government should make strategic decisions based on what is good for the country, not reactive to what MAS can or cannot do," Azran added.

Meanwhile, AirAsia chief executive officer Datuk Seri Tony Fernandes said the access to routes should be driven by the principle of safeguarding consumer interest to ensure that there were choices available and competition to keep airfares in check.

"Limiting access to any airline would deprive air travellers of choice and reasonable fares. The issue of non-competition between AirAsia and MAS should not arise because there is overwhelming concrete proof that all routes where our airlines compete, the overall market has grown by leaps and bounds

"MAS has also benefited as it is now making money in the domestic sector, whereby previously it was losing despite being the sole operator," he added.

Fernandes said it would also be a "travesty" to hold back AirAsia X from certain routes, while at the same time, Malaysia Airports was providing incentives to foreign carriers to fly routes that competed head-to-head with MAS.

"Moreover, history shows that these foreign carriers such as British Airways, Air France and now Jetstar have no loyalty to KLIA - retreating at the first sign of trouble," he added.

Air asia best in innovation

By Biz Times

AIRASIA Bhd has been recognised as one of the world's most innovative companies by Fast Company magazine, the only Asean brand and the only airline to make it to the "Fast 50" list.

Other notable companies include Google, Nike, Facebook, Apple, Disney, GE, BMW and IBM.

AirAsia ranked number 43 this year on the "Fast 50" list, announced in the March 2008 issue of Fast Company.

From green consumer-products phenomenon Method to 100-year-old Corning, which spends US$2 million (RM6.38 million) each workday on R&D, the list celebrates companies that are redefining the rules of business through new ideas.

Twelve of the 50 firms are based outside the US. Fifteen of them are based in and around the Silicon Valley.

"This is a feat we are very proud of, considering we are placed in the same platform as some of the most recognised brands in the world. We are humbled by this news as we've evolved from a Malaysian brand to an Asean brand within a short span of six years and to be recognised on the global front by the coveted Fast Company magazine, is indeed very rewarding," AirAsia group chief executive officer Datuk Tony Fernandes said in a statement.

Fast Company editors described AirAsia as "innovative down to its corporate bones".

"Most passengers think of it as one carrier, but it's actually a co-branded collection of several, a unique structure Tony Fernandes devised to allow AirAsia to set up hubs in three countries (Malaysia, Thailand, and Indonesia)," it said.

It also credited AirAsia for operating costs that are the lowest of any airline in the world, and so are its fares.

Previous awards won by AirAsia include "Airline of the Year 2007" by the Centre for Asia Pacific Aviation (CAPA) and the "Best Low Cost Airline in Asia" by Skytrax Research of London.

Fast Company's final 50 were selected from a list of 300 finalist companies. The magazine placed a high premium on companies that had demonstrated significant innovation over the past year. Actual rankings were determined by vote by a panel of editors and writers.

Fast Company is a monthly business magazine that reports on innovation, digital media, technology, change management, leadership, design and social responsibility. It was launched in November 1995 by Alan Webber and Bill Taylor, two former Harvard Business Review editors.

'Money back' if your flight is delayed

By Business Times

AIRASIA Bhd will soon start refunding passengers for delayed flights.

The airline's chief executive officer Datuk Tony Fernandes said giving refunds for delays was part of AirAsia's plan to improve the low-cost airline's service.

"If we're late and we cause you inconvenience, we'll give you your money back," Fernandes said, adding that the airline hopes to implement this within the next two months.

Fernandes said that AirAsia is currently working out the mechanics to ensure the programme is not abused.

Airline executives, however, said the plan was to refund passengers who were delayed at least three hours or more.

Once implemented, AirAsia would be the first airline in Asia to do this.

"We're showing that we put our money where our mouth is ... that we are confident about our product and are constantly innovating it," he told reporters after an event yesterday.

He said the low-cost airline is able to do this now because of its new Airbus fleet "which is making a lot of difference".

Another service enhancement in the pipeline is a web product, through which customers will be able to order a wide variety of food that they can collect at the terminal and take on board the plane, Fernandes said.

He said AirAsia is currently negotiating with airport operator Malaysia Airports Holdings Bhd (MAHB) to take over an outlet at the low-cost terminal where customers can collect their food. It also plans to start a food trolley service.

On a different matter, he said AirAsia has requested for low-cost terminals to be set up in Kuching and Penang.

"We've talked to MAHB and I think their idea is not to build a separate terminal, but to try and build an extension - a wing - from the existing terminal," he said.

AirAsia would have no objections to this as long as the charges are low and the operations are simple, he added.

Fernandes, who is eyeing new routes in China, also hopes to be able to start a second flight to Shenzen by October given the overwhelming demand.