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Lion Air and NADI announced a JV - Malindo Air

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The third joint venture is a partnership between Nadi Lion Air to embark in setting up a training school to train pilots, in-flight crew and technical personnel for Lion Air as well as for third parties – filling a much-needed void for talent in the country.

 

Am i reading it right? Dont worry Mr Kirana, here we have 1117 unemployed license holder who are willing to pay MYR 150K to fly for you..

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The third joint venture is a partnership between Nadi Lion Air to embark in setting up a training school to train pilots, in-flight crew and technical personnel for Lion Air as well as for third parties – filling a much-needed void for talent in the country.

 

Am i reading it right? Dont worry Mr Kirana, here we have 1117 unemployed license holder who are willing to pay MYR 150K to fly for you..

 

I won't be surprised to see CAE expanding their operation in Malaysia as they are already training Lionair pilots.

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Lion Air Takes Fight to AirAsia’s Malaysian Home: Southeast Asia

 

PT Lion Mentari Airlines, the Indonesian carrier that placed a record order with Boeing Co. this year, is extending its challenge in Southeast Asia’s budget travel market to Malaysia, the home of rival AirAsia Bhd.

 

Lion Air-backed Malindo Airways will sell tickets at prices matching “or maybe lower” than AirAsia’s, Lion Air President Director Rusdi Kirana said in Selangor near Kuala Lumpur yesterday. It will begin services in May and plans to fly to countries including Thailand, China, India, Japan and Australia, besides operating in Indonesia and Malaysia.

 

 

Lion Air’s Malaysia entry follows AirAsia Group Chief Executive Officer Tony Fernandes’ decision to relocate to Jakarta in June to focus on regional expansion. The move pits Boeing’s record customer against the biggest buyer of Airbus SAS narrow-body planes as the two carriers compete for budget travelers. AirAsia fell as much as 5.3 percent in Kuala Lumpur today, the biggest drop on the MSCI Emerging Market Index.

 

“Lion Air may be doing this more in response to AirAsia expanding into its own turf in Indonesia,” said K Ajith, head of regional aviation at UOB-Kay Hian Holdings Ltd.

 

UOB-Kay Hian has a sell rating on AirAsia and cut its price target to 2.92 ringgit from 3.30 ringgit today, according to report from the Singapore-based brokerage. AirAsia (AIRA) was trading at 3.05 ringgit as of 11 a.m. local time, down more than 19 percent this year.

 

 

Boeing Fleet

“Malindo boasts big plans,” Wong Chew Hann and Chai Li Shin, analysts at Kuala Lumpur-based Malayan Banking Bhd., wrote in a report today. “AirAsia is vulnerable as people are easily seduced by low fares.”

 

Malindo Airways may have about 100 planes within a decade, Ahmad Johan, president of National Aerospace & Defence Industries Sdn., told reporters yesterday at an event attended by Malaysian Prime Minister Najib Razak. National Aerospace, in which Malaysia’s finance ministry holds a minority stake and a golden share, will own 51 percent of the new airline, with Lion Air holding the rest.

 

Lion Air signed an order for 230 Boeing (BA) 737s in February, worth $22.4 billion at list prices. The deal, which also included 150 options, was Boeing’s biggest in terms of dollar value and plane numbers. The carrier flies to more than 36 destinations in Indonesia and overseas, according to its website. The region’s total air travel may grow 6.4 percent a year through 2031, spurred by economic growth, according to Boeing.

 

 

Passenger Growth

Malindo will draw its fleet from aircraft ordered by Lion Air Group, including 787s for possible Europe flights, Kirana said yesterday. Lion Air has forecast annual passenger growth rates of 15 percent as it adds more planes. The parent’s fleet may expand to 470 planes by 2025, Kirana said in November, from 100 planes now.

 

AirAsia has grown into Asia’s biggest discount airline since its takeover by Fernandes and partners in 2001. The carrier, based in Sepang, Malaysia, has since set up ventures in the Philippines, Japan, Thailand and Indonesia. The airline and its partner PT Fersindo Nusaperkasa said in July they would acquire Indonesia’s Batavia air for $80 million.

 

Last year, AirAsia ordered 200 Airbus A320neo aircraft valued at $18 billion in the biggest order for the plane maker. It is close to signing a deal for as many as 100 more A320s, Chief Executive Officer Aireen Omar said last month.

 

 

SilkAir, Scoot

Lion Air will face a tougher market in Malaysia than AirAsia has to contend with in Indonesia, UOB-Kay Hian’s Ajith said. “Domestic demand in Malaysia isn’t growing as much as the demand in Indonesia. Lion Air isn’t going to gain much market share.”

 

Both airlines also compete with the budget or regional arms of flag carriers including Singapore Airlines Ltd. (SIA) and Qantas (QAN) Airways Ltd. Singapore Air has responded to the rising competition from discount carriers by expanding its regional unit SilkAir, which has ordered 54 Boeing 737 planes, and starting budget long-haul operator Scoot.

 

Jetstar, the budget arm of Qantas, is building up a network of low-cost carriers across Asia. The airline already has ventures in Singapore, Vietnam and Japan, and is setting up another one in Hong Kong.

 

The airline will boost services to Malaysia, Thailand and Myanmar with the arrival of a 17th A320 aircraft, Jetstar said in an e-mailed statement today.

 

“Malindo Airways’ significance as a threat to AirAsia depends very much on how quickly and sizeable it can scale up its operations,” RHB Research’s Ng said. “Over the longer term, its survival also depends on its ability to beat or at least match AirAsia’s extremely low cost structure.”

 

Malindo Airways “will go all out for market share at the expense of profitability by undercutting prices,” Joshua Ng, an analyst at RHB Research Institute Sdn., wrote in a note yesterday. “AirAsia, on the other hand, may also want to nip the competition in the bud by dropping fares. This will result in a full-scale price war.”

 

Source: http://www.bloomberg...heast-asia.html

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With the involvement of govt. in this new airline, will we see that they start to sell their stake in MH or even reduce it abit? interesting times indeed.. :)

Edited by nrazmoor

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With the involvement of govt. in this new airlines, will we see that they start to sell their stake in MH or even reduce it abit? interesting times indeed.. :)

Govt. probably realise that MH is too big a problem to solve. So they are migrating to another airline and hope that, starting from a clean sheet, it will not have the excesses of MH. If this one takes off, they might be tempted to let go of MH and let it fend for itself.

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The third joint venture is a partnership between Nadi Lion Air to embark in setting up a training school to train pilots, in-flight crew and technical personnel for Lion Air as well as for third parties – filling a much-needed void for talent in the country.

 

Am i reading it right? Dont worry Mr Kirana, here we have 1117 unemployed license holder who are willing to pay MYR 150K to fly for you..

 

I think the training part are more suitably catered for licensed and experienced pilots. TR training just like what AirAsia and CAE do. Our country (like the rest of the world) will never run short of aspiring ab-initios. Bet this piece of news regarding Malindo will make it to APFT, HMA, MFA and other schools' marketing brochure.

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How exciting!

 

"AirAsia fell as much as 5.3 percent in Kuala Lumpur today, the biggest drop on the MSCI Emerging Market Index."

 

"UOB-Kay Hian has a sell rating on AirAsia and cut its price target to 2.92 ringgit from 3.30 ringgit today, according to report from the Singapore-based brokerage. AirAsia (AIRA) was trading at 3.05 ringgit as of 11 a.m. local time, down more than 19 percent this year."

 

“Malindo boasts big plans,” Wong Chew Hann and Chai Li Shin, analysts at Kuala Lumpur-based Malayan Banking Bhd., wrote in a report today. “AirAsia is vulnerable as people are easily seduced by low fares.”

 

 

Source: http://www.businessweek.com/news/2012-09-11/lion-air-takes-fight-to-airasia-s-malaysian-home-southeast-asia

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Doc, I'm looking forward to the return of zero fare sales. ;)

 

I'm waiting for the 787 to go to Europe! :D

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You guys, i think Malindo Airways will use the aerobridges facility at the airports :)

Correct, full service carrier product at low cost carrier fares....

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Free in-flight entertainment and wifi somemore. That is new for a low cost carrier business. This will be the attraction in my opinion.

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Free in-flight entertainment and wifi somemore. That is new for a low cost carrier business. This will be the attraction in my opinion.

Very JetBlue indeed! MAS better make sure they only deploy the new 738 with sky interior and AVOD in every seat for flights between KUL/East Malaysia or else they will soon become irrelevant. Oh, and activate the bloody IFE and hand out complimentary headset to everyone!

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wah, while uncle tony was away concentrating on something else, the neighbour came in from behind and took over the house!

oh dear. bad for tony, good for Malaysians.

 

if tony is not interested in Malaysia, let others come in! welcome, Malindo airways! may your 787s also be based in KLIA2!

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Competition, more choice and cheaper price is always good for consumers.

Have not seen so much positive excitement here for quite some time already ! :D

 

wah, while uncle tony was away concentrating on something else, the neighbour came in from behind and took over the house!

oh dear. bad for tony, good for Malaysians.

Slow down doc, they haven't even gotten off the ground yet :p

And who are we to discount possibility Tan Sri is already engineering another share swap or collaborative framework or etc etc ..... :D

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Competition, more choice and cheaper price is always good for consumers.

 

Competition and choice are always good. Be careful of lower price as there is a limit.

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Competition and choice are always good. Be careful of lower price as there is a limit.

 

Agreed.. i mean how low the price can it be especially with the current oil price...

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I wonder where are they gonna set that up. Maybe take over the busted GGIFA at Bintulu.

 

Fingers crossed ! :D

 

Anybody the routes this new partnership will focus on ? An interesting start would be by introducing amphibians since both M'sia & Indon are blessed with rivers / seas and most major towns are situated along either one.

 

Not sure if B787 will make a difference. Top priority for a budget traveler is cost and schedule. if you have 5 x connections to a city compare to just 1 , equipment type won't matter.

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RHB: AirAsia has ‘many defences’ over rival Malindo

 

KUALA LUMPUR: AirAsia Bhd has many “defences” against Malindo Airways, the new low-cost carrier start-up that will compete with it in the domestic market, said RHB Research Institute.

 

These included AirAsia's lower cost structure, strong balance sheet, much bigger size, highly recognised brand and good safety records, the brokerage said in a report.

 

RHB's aviation analyst Joshua Ng wrote, quoting AirAsia, that in the immediate term, the company might not need to cut ticket prices at all, or if it did, the cuts might not be significant to counter a price cutting by Malindo, should there be any.

 

This was because Malindo would not have the capacity to replicate all of AirAsia's domestic routes, and for those popular routes that it would, its frequencies might be just a fraction of AirAsia's, Ng said.

 

“We suspect the market (ourselves included) could have been a little ahead of itself in terms of the prediction of a price war, and the depth and width of it,” RHB said.

 

“Separately, AirAsia said that it is rethinking its plan to acquire rival Batavia Air in Indonesia for RM240mil cash. AirAsia hinted that having got to know the Indonesian aviation sector better due to the proposed acquisition, it now feels that to grow its Indonesian operations organically may not necessarily be a bad idea after all,” it said.

 

Ng said AirAsia's near-term earnings growth prospects were less exciting, as growth from its domestic operations was tapering off, coming from an enlarged base.

 

“Not helping either are lingering losses from its new low-cost carrier start-up in Japan and the online air travel agent Expedia JV, given the long gestation periods for these new ventures,” it added.

 

However, RHB believes that value has emerged after the steep selldown on the back of the Malindo news with a fair value of RM3.63 per share based on 12 times financial year 2012/2013 earnings.

 

“We do not believe Malindo can become a meaningful threat to AirAsia's domestic operations overnight as it takes time for Malindo to grow its operations to a significant size to become a worthy rival to AirAsia,” it said. “Over the longer term, its survival also depends on its ability to beat or at least match AirAsia's extremely low-cost structure.”

 

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/9/15/business/12032916&sec=business

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@ flee.

 

From your above posting I read this among others,

 

Separately, AirAsia said that it is rethinking its plan to acquire rival Batavia Air in Indonesia for RM240mil cash. AirAsia hinted that having got to know the Indonesian aviation sector better due to the proposed acquisition, it now feels that to grow its Indonesian operations organically may not necessarily be a bad idea after all,” it said.

 

There are indeed rumors doing the round in Jakarta that all is not carved in stone yet. However, I could not get anything confirmed. This is also the first time that an "Analyst" says something that is not already known by the industry.

 

Did you happen to hear something on this issue in your circles?

 

Thx

Best regards

Art

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KUALA LUMPUR: AirAsia Bhd has many “defences” against Malindo Airways, the new low-cost carrier start-up that will compete with it in the domestic market, said RHB Research Institute.

I do hope that is not a reflection of complacency - anyone remember similar thoughts when the red Air Asia took off with the two 733's and MH had near complete monopoly in the domestic market ? :)

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