Lion air plans USD600 million expansion

[Pieter C. 5]

Lion Air Plans USD$600 Mln Expansion

 

November 15, 2007

Indonesia's largest private airline, Lion Air, plans to raise up to USD$600 million to acquire stakes or set up new airlines in a number of Asian countries, a company official said on Wednesday.

 

Lion Air was looking at possible expansion in six countries -- Thailand, Malaysia, Vietnam, Bangladesh and the Philippines, Hasyim Alhabsi, the head of public relations, told reporters.

 

The airline recently ordered an additional 22 Boeing 737-900 planes as part of its expansion plans, lifting its total orders at the US firm to 122 jets, with a total list price of USD$7 billion.

 

"God willing, within 1 to 5 years we will be (operating) in those countries. In the near term, there may be some deals completed in Thailand, Vietnam and Bangladesh," Alhabsi said.

 

"We have been collecting funds from both internal and external sources. We will prepare around USD$50 million to USD$100 million for each country."

 

He did not elaborate on how the money would be raised.

 

The carrier currently has a fleet of 40 jets on 32 routes.

 

Lion Air has been aggressively expanding in Indonesia's fast growing airline industry in a country of 220 million people spread across more than 17,000 islands.

 

The carrier is also expected sign a 10 year USD$1 billion contract next year with Delta Air Lines, under which the US airline will provide maintenance and services for Lion's fleet.

 

Indonesia's airline industry has grown rapidly since the government liberalized the sector after the financial crisis in the late 1990s. But a series of recent accidents has raised questions over whether safety has been compromised and whether the infrastructure and personnel can cope with the huge increase.

 

There have been calls from some Indonesian officials to modernize ageing fleets to help improve safety.

 

(Reuters)