AirAsia, South East Asia's biggest budget carrier, bought a 49 per cent stake in Philippine rival Zest Airways, increasing its bet on a surge in travel in the country.
The Sepang, Malaysia-based carrier's Philippines venture AirAsia agreed to acquire the holding and all of Zest's affiliate Asiawide Airways from Alfredo Yao, vice chairman of Export & Industry Bank, according to a joint statement from the carriers today. Yao will get a 15 per cent stake in closely held AirAsia, chief executive Marianne Hontiveros said in a briefing today in Manila.
"The Philippine market is very small compared to what it should be," Tony Fernandes, the group chief executive of AirAsia said. "This strategic partnership is about growing the market."
AirAsia's expansion in the Philippines comes a week after it won approval to form a unit in India. The Malaysian carrier formed the Philippine venture in December 2010 to gain access to routes within the country as rivals Cebu Air and Philippine Airlines expand their fleets and boost flights in the region.
The AirAsia Philippines unit is a venture with former Philippine Long Distance Telephone Co chairman Antonio Cojuangco and two investors. Mr Cojuangco and the two other investors will now own 15 per cent each of the company, matching Mr Yao's 15 per cent stake.
AirAsia shareholders will also add funds for working capital, according to the statement, which did not elaborate.
The Philippine operations will get a share of the 100 Airbus SAS A320s AirAsia ordered last year, Mr Fernandes said.
* Bloomberg News
