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Tony Fernandes raises AirAsia stake on ‘good value’

PETALING JAYA: It was good value, according to Tan Sri Tony Fernandes and his partner Datuk Kamarudin Meranun, that prompted them to raise their stake in AirAsia Bhd when the share price fell in reaction to the establishment of Malindo Airways that is expected to intensify competition in the domestic and regional air sector.

Yesterday, AirAsia also announced that it had aborted a deal to buy a 49% stake in closely-held Indonesia’s Batavia Air.

AirAsia shares came under some selling pressure in early September after Malindo, a low-cost carrier, announced that it would begin plying the Malaysia-Indonesia routes on May 1.

According to filings made to Bursa Malaysia, Fernandes and Kamarudin added 0.86% stake to bring their total stake (indirect) in the company to 24.12%.

Both had bought the shares in tranches. The first block of shares totalling 23.95 million were bought from Sept 25 to 27 at prices ranging from RM2.84 to RM2.92 a share.

They also acquired 6.05 million more shares from Oct 3 to 5, at undisclosed prices.
Asked the reasons for the share purchases, he said “it was a good buying opportunity.”

“It is good value to what we are building,” Fernandes told StarBiz.

Asked if it was a move to support the share price since it came under selling pressure, he said: “That was not on my mind.”

“We cannot hold the market, if the market wants to push share prices down, no Tony Fernandes can stop the market as this is a RM3bil company by market capitalisation.

“We pay dividends, we are growing, and we are also growing in Indonesia. This was just a buying opportunity.”

The Employees Provident Fund (EPF) had also increased its stakes in AirAsia by acquiring about 450,000 shares. The EPF board now holds total direct and indirect stakes of almost 10% in AirAsia.

The airline said it was aborting the US$80mil deal to buy Batavia Air and Fernandes did not see the collapse of the deal as a setback for the growth of the airline. He said the airline had plans to push ahead with growth in the markets they were already in and to set up new ventures in South Korea, India and Myanmar.

AirAsia had announced its first ever acquisition in July to accelerate expansion in Asia. However, Fernandes said after thorough evaluation, AirAsia found the deal would have “induced too many risks” and hurt earnings.

“We always knew it was not going to be an easy transaction. It has been a very good experience and we come out of it feeling more confident of what we need to do to grow the market in Indonesia,” he said.

“Our aggressive focus in Indonesia remains and we will push our Indonesian IPO plans while still maintaining close cooperation with Batavia Air,” he added.
Dharmadi, CEO of AirAsia Indonesia, said the airline would accelerate its fleet expansion starting from 2013.

“We are looking to more than triple our fleet size in the next five years to accommodate an average annual passenger growth rate of 24% and 28% in international and domestic markets respectively. We will continue to strengthen our network by adding more hubs and developing our services to eastern Indonesia.”

In an effort to stay ahead of the curve, AirAsia Indonesia would also upgrade its sales and distribution system, provide differentiated services while implementing dynamic pricing strategies, an AirAsia statement said.-TheStar


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