Indonesia’s Mandala Airlines Bankrupt Again

[flee 5]

 

JAKARTA - INDONESIAN budget airline PT Mandala Airlines suspended operations on Thursday as it seeks to restructure debt and secure strategic backers.

 

President Director Diono Nurjadin said a debt restructuring request would be filed in the the Commercial Court in a bid to keep the airline aloft.

 

'This is the best course of action to ensure the continued survival of the airline,' Mr Nurjadin said in a statement.

 

'Over the past few months, Mandala Airlines has been performing at a commercial loss and the situation now is such that we need to restructure the company to pave the way for the entry of new investors.'

 

He told reporters operations would cease temporarily 'so we can focus on debt restructuring and invite several potential investors'.

 

The company did not release details of how much money it owed nor the identity of its creditors. Mandala is 51 per cent owned by PT Cardig International and 49 per cent by US-based Indigo Partners LLC, according to its website. -- AFP

[Tamizi Hj Tamby 1]

Looks like Mandala in trouble;If i'm not mistaken,Mandala was founded by a Foundation linked to the ABRI (Indonesian Armed Forces).

[reyneo 0]

A little surprised I must say. Never flown with them... but I was always under the impression that mandala was the best Indonesian carrier, at least before Garuda went on their major 360 makeover... I always thought mandala were a bit more 'premium' than the bunch of LCC-esque indo carriers...

 

Someone posted a rumor on a.net that Jetstar or Tiger might buy them out... and I agree, I think theres a very real possibility of QF or TR taking over the 49% stake from Indigo? Jetstar Indonesia or Tiger Indonesia or who knows, Firefly Indonesia? At this point, its just pure speculations, no evidence whatsoever yet.

[Waiping 12]

A little surprised I must say. Never flown with them... but I was always under the impression that mandala was the best Indonesian carrier, at least before Garuda went on their major 360 makeover... I always thought mandala were a bit more 'premium' than the bunch of LCC-esque indo carriers...

 

Someone posted a rumor on a.net that Jetstar or Tiger might buy them out... and I agree, I think theres a very real possibility of QF or TR taking over the 49% stake from Indigo? Jetstar Indonesia or Tiger Indonesia or who knows, Firefly Indonesia? At this point, its just pure speculations, no evidence whatsoever yet.

 

Same here since I thought they are rather new compared to the others. So setup wise should be much more careful especially that the negative press on Indonesian Airliners.

[suadrif 0]

MH cepat, cepat and invest your money in Mandala and soon we have Mandala Firefly

[dean hizudy 0]

MH cepat, cepat and invest your money in Mandala and soon we have Mandala Firefly

Hmm.. I thought that the new Indonesian policy does not give the foreign airlines branding the indonesian airlines using their name right? I think whichever foreign airlines want to buy them, they still have to retain the Mandala Airlines name.

[Mohd Azizul Ramli 2]

Mandala is going to announce its new shareholders tomorrow. Rumours are saying that Singapore's Tiger Airways is going to own more than 1/3 of the company.

[reyneo 0]

Confirmed

 

I thought Jetstar was eyeing Mandala at one point, a little sad that its going to Tiger... Mandala's business model was a little closer to 3K than TR IMO. They were LCC-esque but targeting business contracts and flying from main terminals instead of budget ones. Oh well, now that Tiger has effectively 'bought Indonesian air rights' so to speak, i guess its safe to say that tiger (maybe via mandala) will finally launch the DPS/SUB/MES-SIN flights that they've been lobbying so long for and possibly increase SIN-CGK as well?

 

Tiger to acquire 33% stake in Indonesia's Mandala

By Stella Lee | Posted: 19 May 2011 2002 hrs

 

SINGAPORE: Tiger Airways said it would acquire a 33 per cent stake in Indonesian PT Mandala Airlines.

 

The agreement is subject to due diligence and conclusion of definitive contracts.

 

Mandala intends to emulate the business model of Tiger Airways and is currently undergoing a financial restructuring process.

 

The restructured airline will fly low cost domestic and international flights with Airbus A320 aircraft from Indonesia.

 

All flights will be under five hours and its cabin and flight crew will be based in Indonesia.

 

The Saratoga Group will be the largest shareholder in Mandala, holding a 51 per cent stake.

 

Another 16 per cent will be held by the previous shareholders and creditors of Mandala.

 

-CNA/wk

[Mohd Azizul Ramli 2]

May 19, 2011

Tiger Airways looking at 33% stake in Mandala Airlines

http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_670383.html

By Karamjit Kaur, Aviation Correspondent

 

SINGAPORE budget carrier Tiger Airways announced on Thursday that it has signed a 'term sheet' - a non-binding document - to acquire a 33 per cent stake in Indonesia's Mandala Airlines.

 

The acquisition, the airline said, is subject to due diligence and a definitive contract.

 

Mandala Airlines is in the midst of a financial restructuring process. The low-cost carrier plans to adopt the Tiger Airways business model, offering low-fare travel to international and domestic destinations within a five-hour flying radius from Indonesia.

 

Like other airlines in the Tiger Airways Group, the restructured airline would also operate Airbus A320 aircraft. Flight and cabin crew will be based in Indonesia.

 

The largest shareholder in the restructured Mandala will be the Saratoga group, which will hold a 51 per cent. The remaining 16 per cent will be held by the previous shareholders and creditors of Mandala.

I also think this news relates to why AK is moving its regional HQ to Jakarta and giving more focus on Indonesia, now that its fiercest regional competitor - Tiger - is finally having a foot in Indonesia.

[Mike P 0]

Indonesia's aviation is definitely playing a vital role due to its geographical area and formation of islands. The most possible and convenient connection is by flight. Hopefully some airlines could penetrate into the market successfully and I believe some big fortunes could be made through it.

[reyneo 0]

I was cycling along the Changi park connector that runs parallel to Changi Airport a few weeks ago when I saw an A320 with a tiger tail and Mandala tittles parked at a remote stand near the edge of Terminal 1 & 2. I didn't have a camera with me, but did some searching and found this picture:

(Source: http://www.airliners.net/aviation-forums/trip_reports/read.main/207846/)

The aircraft in question is 9V-TRC, one of Tiger Singapore's newest A320 (MSN4918). Not sure if its still parked there, but it could mean that Mandala might start operations pretty soon. Some reports have it at either April or Feb 2012 (IMO April is more likely since you need time to sell tickets and IIRC Mandala still doesnt have its AOC activated yet).

[Tamizi Hj Tamby 1]

Hmmm; Interesting hybrid.Anyhow thanks for sharing the photo with us here,and hopefully Mandala will be flying back again.

[JuliusWong 0]

Yes, you are correct. Tiger Airways bought 33% of Mandala Airlines last year. It is scheduled to re-start operation soon later this February, pending approval from local government. Mandala’s new operation will be based on Tiger’s low cost business plan and will use Airbus A320 aircraft to offer low-fare travel to international and domestic destinations within a five-hour flying radius.

 

If I am not mistaken, they are transferring another A320 to Mandala to fulfill the local government regulation in having minimum of five aircrafts: two owned, three leased. I would think it would be 9V-TRD delivered not too long ago.

 

A trivia: 9V-TRA and 9V-TRB are A319s. Now with SEAir, Tiger Airways JV in the Philippines.

[alberttky 0]

Tiger Airways is banking the booming Indonesian market can support another new carrier and absorb over the next 14 months at least 10 A320s from the struggling airline group’s surplus fleet. Singapore-based Tiger has not yet invested a penny into Mandala Airlines but has a lot at stake as the Indonesian carrier plans to resume services in April following a 15-month hiatus, using Tiger’s aircraft and business model. While it only had to pay a token one dollar for its 33% stake in Mandala, Tiger along with Mandala’s other new investors will be providing a loan to cover re-launch costs and will need to continue pumping in capital until the airline becomes profitable, a potentially challenging proposition given current market conditions in Indonesia.

 

The new Tiger-backed Mandala will compete against three powerful LCCs in the Indonesian market – Lion Air, Indonesia AirAsia and Garuda Indonesia budget unit Citilink. These carriers combined now operate about 100 aircraft and are all expanding at high double-digit rates. Mandala will also have to compete against Garuda’s fast-expanding mainline operation and three second tier Indonesian carriers – Batavia Air, Sriwijaya Air and Merpati Nusantara Airlines – which also currently operate a combined fleet of about 100 aircraft and offer low fares, although they are not generally considered to be LCCs.

 

The new Mandala business plan calls for the carrier to re-activate its Air Operator’s Certificate (AOC) and resume ticket sales by the end of this month. A resumption of services is expected in April with an initial fleet of three A320s operating primarily international routes from a hub at Jakarta International Airport’s Terminal 3. On regional international routes, Mandala will primarily compete against Indonesia AirAsia, Lion Air and Garuda mainline as Citilink for now only operates domestically and Indonesia’s second-tier carriers are also predominately domestic.

Indonesia’s regional international market is much smaller than the country’s domestic market but significantly less competitive and relatively underserved. Indonesia last year recorded 13% growth in international traffic to 10.8 million passengers.

 

Most of Indonesia’s international market is within narrowbody range as there are now a relatively limited number of long-haul services from Indonesia. Indonesia AirAsia, which is now the only Indonesian carrier with more capacity (seats) in the international rather than domestic market, has a leading 17% capacity share of Indonesia’s international market.

 

When factoring in the operations of AirAsia Malaysia and Thai AirAsia, the AirAsia Group has a commanding 28% share of Indonesia’s international market, putting it well above the 16% capacity share at Garuda. Lion currently only has a 10% share of the international market but is focussing this year on expanding its international operation as it is already the market leader domestically with a 45% share (which is far ahead of the combined 25% domestic capacity share at Garuda and Citilink).

 

LCCs overall now account for 59% of total capacity in Indonesia’s international market, making it the largest LCC international market in Southeast Asia. Lion’s expansion and Mandala’s re-launch should lead to a further increase in Indonesia’s already high international LCC penetration rate, although this will be partially offset by rapid expansion in the regional international market by Garuda.

 

Indonesia AirAsia to be most impacted by Mandala’s re-launch

 

Mandala has not yet announced its new route network but it will likely focus on routes within Southeast Asia. This is huge market consisting of over 184,000 seats per week in each direction and accounting for 65% of total capacity (seats) in Indonesia’s international market. This market is now dominated by the AirAsia Group, which has a 42% share of capacity between Indonesia and other Southeast Asian countries.

 

As AirAsia and Tiger groups are bitter rivals, AirAsia will likely rigorously defend its turf as Mandala expands. Mandala, as a much smaller entity than Indonesia AirAsia and facing a challenge in repositioning its brand after more than one year of not participating in the market, could initially have a tough time turning a profit in such conditions. Even Indonesia AirAsia has had a tough time financially as it has consistently been the worst performer in the AirAsia Group, turning an operating profit of less than USD10 million in the first nine months of 2011.

 

Mandala also plans to operate some domestic trunk routes, where the competition is even more intense. It is this competition which ultimately forced the original Mandala, which prior to its suspension was operating a fleet of 11 A320s in the domestic market, into bankruptcy. Other Indonesian carriers quickly filled Mandala’s void and the Indonesian domestic market was able to grow by 18% in 2011 to 51.5 million passengers despite the suspension at Mandala.

 

Domestic trunk routes in Indonesia are generally served by six carriers – AirAsia Indonesia, Citilink and Lion from the budget end and Garuda, Batavia and Sriwijaya from the full-service end (Merpati primarily operates regional routes). Two other full-service carriers are also expected to launch services this year on domestic trunk routes – start-up Pacific Royale Airways and Lion’s new full-service unit, Space Jet.

 

Lion plans to use Space Jet, which will operate business jets as well as some of the 300 plus Boeing 737s Lion has on order, to compete primarily against Garuda mainline as Lion itself focusses on fighting off a rapidly expanding Citilink. The impact from the launch of Space Jet and Pacific Royale, which is aiming to launch services next month with an initial fleet of five A320s and five Fokker turboprops, in theory should be minimal because Mandala/Tiger will focus on the low end of the market. But in Indonesia inevitably all carriers end up competing as economy class fares are typically low across both the budget and full-service sectors.

Mandala to re-launch with three A320s

 

Despite the tough market conditions, Mandala is planning to pursue rapid growth once it launches operations. In addition to providing the new Mandala with its initial fleet of three A320s, Tiger has allocated Mandala seven additional A320s in the group’s fleet plan for fiscal 2012/13, which starts 01-Apr-2012.

 

The anticipated 10 aircraft fleet for Mandala by Mar-2013 meets a requirement from Indonesia’s Directorate General of Civil Aviation (DGCA), which requires all airlines have at least 10 aircraft (Mandala will have about one year to spool up and meet this requirement). This requirement scares away a lot of potential investors in Indonesia’s dynamic airline industry. But it does not at all scare Tiger because the group happened to have a surplus fleet of 10 aircraft that need homes by early 2013.

 

Tiger expects to end its current fiscal year with a fleet of 33 A320s and two A319s, up from 31 A320s and two A319s at the end of Dec-2011 (in the current quarter it is taking delivery of three A320s but is returning one A320). The group’s two A319s are now in the Philippines while the A320s are now split between Australia (10 A320s) and Singapore (temporarily at 22 A320s). But Indonesia has been allocated two of the A320s currently in Singapore, which will be used this month for proving flights required to re-activate Mandala’s AOC, and a third A320 which is being delivered later this quarter. As a result, Tiger plans to end its current fiscal year with 20 A320s in Singapore, 10 A320s in Australia, three A320s in Indonesia and two A319s in the Philippines.

 

The group is committed to taking delivery of 10 additional A320s in FY2012/13 but will return two A320s for a net of eight aircraft. Tiger has allocated seven of these aircraft for Indonesia, giving Mandala a fleet of 10 A320s by the end of Mar-2013 while the eighth aircraft has been allocated for delivery to Tiger Australia in 4QFY2012/13. Assuming Tiger does not adjust this allocation as the year unfolds (the carrier’s management team stresses it has the flexibility to make changes in response to demand), Tiger will end FY2012/13 with 10 A320s in Indonesia, 20 A320s in Singapore, 11 A320s in Australia and two A319s in the Philippines.

 

Tiger needs Mandala to operate all 10 aircraft as currently planned because the group is no longer interested in further expanding its Singapore fleet due to the recent tough market conditions in Singapore, which suggest the Singapore budget market is approaching saturation after several years of rapid growth. Tiger’s Singapore operation fell into the red for the quarters ending 30-Sep-2011 and 31-Dec-2011 as the Singapore market struggled to absorb the additional capacity Tiger put into the market. Tiger was forced to put a significant amount of new capacity into Singapore, where it was growing most of last year at a clip exceeding 20%, after having to reduce its Australia fleet following the six-week grounding of its unprofitable Australia operation in mid-2011 and after it ran into repeated delays in setting up planned new joint ventures in Indonesia, the Philippines and Thailand.

 

The Thailand project, which took the form of a proposed joint venture with Thai Airways that was initially signed in Aug-2010, was formally called off in Dec-2011. Thai Tiger was initially planning to launch services in early 2011 but repeatedly ran into delays in securing approval from the Thai Government, prompting Thai Airways and Tiger to eventually scrap the project altogether.

 

Tiger faces more delays in Philippines project

 

The Philippines venture has been stuck in the due diligence phase since Feb-2011, when Tiger first announced the signing of a term sheet to acquire a 32.5% stake in SEAir. The small Philippine carrier has been operating since Dec-2010 two Tiger A319s on regional international routes from Manila alternative airport Clark as part of a marketing tie-up with Tiger.

 

Tiger CEO Chin Yau Seng said last week during the group’s fiscal third quarter earnings media call that negotiations with SEAir continue and the planned investment is “pretty much a work in progress”. If the deal is completed, SEAir will expand its A320 family fleet with additional aircraft provided by Tiger and launch domestic services while splitting its existing regional turboprop operation into a separate company. Mr Chin says Tiger still ultimately aims to acquire a stake in SEAir and have the carrier join Mandala in its portfolio but “it’s not an investment at all cost” and Tiger still needs to make sure it has the right investment structure in place and “bed down” terms and conditions it is comfortable with.

 

But as negotiations with SEAir continue to drag on, the likelihood of the deal being completed is decreasing. The Philippine market has become increasingly competitive with several LCCs battling in the domestic market and increasingly the international market. The upcoming launch of Philippines AirAsia, which has just received its AOC and plans to begin operations in March or April, will further intensify competition in the Philippines LCC sector, where there are already five players.

 

Further darkening the cloud hanging over the proposed Philippine joint venture, Tiger reported as part of its 3QFY2011/12 earnings that SEAir is behind in paying for the two leased A319s and marketing and distribution services (Tiger has been selling SEAir-operated flights on its website as part of the tie-up). As a result any expansion of the tie-up, which was initially intended in mid-2011 with the lease of two additional Tiger A320s to SEAir, has been put on hold pending an outcome to the negotiations over the planned investment.

 

If the deal fizzles entirely, the existing tie-up will also likely be dropped, forcing Tiger to find new homes for the two A319s now leased to SEAir. This would pose a big challenge to Tiger because the group already has several surplus aircraft.

The excess aircraft issue has posed a huge challenge to Tiger over the last year and is now draining its financials. In Australia, it is still only flying the equivalent of seven aircraft despite having a 10-aircraft fleet due to restrictions which remain in place six months after the grounding by Australian authorities ended.

 

Tiger Australia has been reporting improvements in its business but the carrier’s very low aircraft utilisation rate is making it impossible for the subsidiary to make money. For the quarter ending 31-Dec-2011 Tiger Australia again was in the red, posting an operating loss of SGD9 million (USD7 million).

Tiger also faces challenges in home market of Singapore

 

Mr Chin says Tiger Singapore also had more aircraft than it needed last quarter, contributing to a 3QFY2011/12 operating loss of SGD5 million (USD4 million) at the Singapore unit (see Background information). Tiger Singapore technically now has 22 A320s in its fleet but two aircraft have been set aside for Mandala since December. Mr Chin says these aircraft will soon be used in Indonesia for proving flights associated with Mandala’s application to reactivate its AOC.

 

Mr Chin remains confident Mandala will be able to reactivate its AOC later this month and beat a deadline from Indonesian authorities, which if missed could force the carrier to lodge an entirely new AOC application. He says Tiger plans to have a third A320 delivered to Mandala in March, after the AOC is reactivated but prior to the resumption of revenue services.

With two of its A320s already set aside for Mandala and a third aircraft being prepared for return, Tiger Singapore currently has an operational fleet of 19 A320s. But even these aircraft are not being fully utilised. Tiger Singapore has been underutilising its aircraft for several months as the carrier has been stuck with more aircraft than planned due to the delays in the Indonesian and Philippine investments.

 

Tiger Singapore is now planning to increase average aircraft utilisation levels with the start of its Northern Hemisphere summer 2012 schedule. Tiger says its capacity will be up 11% year-over-year this summer, compared to the 18% capacity increase posted in its most recent quarter (3QFY2011/12). Some of the additional capacity will be generated by improving utilisation of its existing aircraft with more night flying. Tiger Singapore will also add a 20th operational aircraft to its fleet prior to the onset of the summer schedule.

 

Tiger has been unable in recent months to use its surplus aircraft to further expand in Singapore because the budget market in Singapore became oversaturated from mid 2011 as a result of very rapid expansion by Tiger, Jetstar AirAsia and AirAsia – all of which now have roughly equal shares of the Singapore market. While acknowledging the challenging market conditions in Singapore, Mr Chin says the situation is improving and he is confident there are still opportunities in Singapore for some further growth, albeit more modest than in recent years.

He pointed to Tiger’s upcoming launch of service from Singapore to Dhaka in Bangladesh, a route not served by any LCC, and says there are a few more new routes “in the cards” and “we see a lot of opportunities”. Mr China also says that while Tiger, AirAsia and Jetstar all expanded rapidly in Singapore last year, each group has been focussing on different markets.

 

AirAsia’s expansion in Singapore, for example, has focussed primarily on Indonesia and Malaysia. In the Singapore-Indonesia market, which is one of the largest markets within Southeast Asia, Indonesia AirAsia is now the second largest carrier after Singapore Airlines with a 19% share of capacity. As Tiger now only has 3% share of capacity in this market, it is likely the group will use Mandala to operate to Singapore and compete with AirAsia on several Singapore-Indonesia routes where Indonesia AirAsia is the only LCC.

 

Mandala will also likely be used to open routes to Malaysia, the Philippines, Thailand and Vietnam, markets which Mandala can leverage existing Tiger infrastructure as Tiger already operates several flights to these countries from Singapore. Perth in West Australia could also be an option, where Mandala would potentially be able to hook up with both Tiger Australia and Tiger Singapore.

Saratoga and IAE also part of Mandala’s new ownership group

 

The Mandala project has been in the works since May-2011, when Tiger first announced its intention to acquire a 33% stake in the bankrupt carrier and invest in its re-launch. The deal, which took several months to complete as it needed to work its way through Indonesia's bankruptcy court, was finally concluded late last month. Indonesian investment firm Saratogoa is the primary new investor in Mandala with a 51% stake. The remaining 16% is held by Mandala’s previous shareholders and creditors.

 

The prior shareholders included Indonesian transport group Cardig and US investment firm Indigo, which was also a founding partner in Tiger. Engine manufacturer IAE is one of Mandala’s creditors which ended up with a small minority stake in the new company. The original Mandala had an order for 24 A320s powered by IAE’s V2500 engines. This order has been wiped clean as part of the bankruptcy process and Mandala’s previous fleet of 11 A320s was returned to their lessors after the airline was grounded in Jan-2010. The new Mandala will rely at least initially on Tiger’s A320 order book, although Tiger plans to transfer all Indonesia-bound aircraft to Mandala via a third-party company in order to meet Indonesian regulations.

 

Tiger’s management is bullish on Mandala’s prospect as Indonesia is a big market with huge growth potential. But the group faces an uphill battle as it is looks to overcome the first mover advantage of AirAsia in the Indonesian market as well as two powerful local airline groups in Garuda/Citilink and Lion. It is a battle Tiger has little choice but to wage, even if its odds at succeeding are relatively slim. The group simply can’t afford to sit still given its orderbook, which includes about 40 additional A320s, and the limited size of its home market.

 

Mr Chin acknowledges Tiger is “quite glad at least one joint venture” is finally happening. Not Tiger just has to hope the Mandala investment pays off and at least one more joint venture is launched to provide an alternative for the steady of stream of aircraft to be delivered over the next several years.

 

http://www.centreforaviation.com/analysis/tiger-places-big-bet-on-indonesia-with-re-launch-of-mandala-67671?utm_source=Aviation+Analyst&utm_campaign=2de136362b-Aviation+Analyst&utm_medium=email

[alberttky 0]

SINGAPORE - Indonesian carrier PT Mandala Airlines has been cleared to fly after being grounded for a year due to massive debt, its second-biggest shareholder Tiger Airways said Tuesday.

 

"Tiger Airways Holdings Limited is pleased to announce that PT Mandala Airlines' Air Operator's Certificate has been reactivated by the Indonesian Director General of Air Communications," the Singapore budget carrier said.

 

"Information regarding the number of aircraft, the initial routes and destinations for Mandala will be announced soon. The resumption of flights is scheduled for April 2012."

 

Mandala Airlines' clearance to fly culminated a year of financial restructuring after the carrier was grounded in January 2011 due to its enormous debt.

 

As a result of the restructuring, Indonesian investment company Saratoga Group holds a majority 51.3 per cent stake, with Singapore budget carrier Tiger Airways owning 33.0 per cent through wholly-owned subsidiary Roar Aviation Pte Ltd. The remaining 15.7 per cent stake will be held by Mandala's previous sh areholders and creditors.

 

Mandala Airlines - which was owned by the Indonesian military until 2006 when private investors took over - will adopt Tiger Airways' low-cost carrier model and will use Airbus A320 aircraft in its fleet.

 

It aims to fly within Indonesia and to international destinations within a five-hour flying radius.

 

http://www.relax.com..._fly_again.html

Edited February 21, 2012 by alberttky

[flee 5]

Saw this Tiger A320 with Mandala titles parked in the remote stand last week. Sorry for the quality - I only noticed this in the background of my pix!

 

[JuliusWong 0]

There are actually two of them, if I am not mistaken. Another one is near where flee took the picture.I could be wrong, saw it when I flew down to SIN last Friday night for Air Show......

[flee 5]

SINGAPORE, March 3 (Reuters) - Singapore's Tiger Airways Holdings Ltd may be forced out of Indonesia, Southeast Asia's biggest domestic airline market, as its unprofitable joint venture is squeezed out of routes dominated by big-spending local carriers.

Tiger might sell or close Tigerair Mandala in the absence of any signs of the airline turning around this year, such as a significant reduction of losses, people familiar with the matter told Reuters.

More: http://www.reuters.com/article/2014/03/03/tiger-air-hold-indonesia-idUSL3N0M01PZ20140303

[flee 5]

AirAsia’s Fernandes Not Refuting Mandala Bid

 

Kuala Lumpur. Malaysian aviation tycoon Tony Fernandes says his AirAsia Group, the biggest budget carrier on the continent, may be interested in acquiring Indonesia’s TigerAir Mandala.

“We would look at [an acquisition]. We’ve done one acquisition — it wasn’t really our thing, but never say never,” Fernandes, the founder and chief executive of AirAsia, said on Monday on the sidelines of CIMB’s Invest Malaysia 2014 event in Kuala Lumpur.

Details about any deal will be disclosed during his visit to Jakarta today, Fernandes added.

Singapore-based TigerAir, a subsidiary of Singapore Airlines, and Indonesia’s Saratoga Capital, a diversified investment company, are reportedly selling their stakes in TigerAir Mandala, previously known as Mandala Airlines, while has been posting losses since its rebranding in 2012 due to higher operating costs.

AirAsia, based in Kuala Lumpur, was identified by a source last week as the strongest candidate for a possible acquisition. Other prospective buyers include a non-airline investor and Citilink, the low-cost unit of state-owned carrier Garuda Indonesia.

TigerAir holds a 33 percent stake in TigerAir Mandala, while Saratoga controls 51.3 percent. Creditors hold the rest.

Fernandes said rationalization and consolidation would be a common trend within the Indonesian aviation industry, as operational costs in Southeast Asia’s biggest aviation market continue to climb.

“There’s too much capacity in Indonesia right now and without a doubt there will be a rationalization of airlines soon,” he said, citing Citilink and AirAsia’s local unit, Indonesia Air Asia, as examples of Indonesian budget carriers struggling to stay profitable.

“I think Citilink is losing lots of money… For Indonesia AirAsia, maybe we can make some money this year, but it’s very hard,” Fernandes said.

Indonesia’s aviation industry has been fumbling for profit as the weakening rupiah — which lost 26 percent of its value against the US dollar last year — and the fast-growing demand from the country’s burgeoning middle class burden the industry with higher operational costs.

In addition, higher airport taxes have exacerbated the situation for airlines, according to Fernandes.

“AirAsia has tried to develop many international routes, but airport tax keeps going up, so we have to cancel routes,” he said. “Airports have to play their part — we gotta land somewhere.”

Indonesia AirAsia canceled its Jakarta-Makassar service in February, citing rising costs to serve the 1,600-kilometer route.

While the potential for budget airlines in Indonesia remains massive, Fernandes urged the government to play a part in improving airports, especially in addressing the urgent need for more landing space.

He also foresees a systematic overhaul of the country’s aviation industry — from consolidation to capacity cutting — on the horizon.

“It’s a shame. I think the Indonesian aviation industry could be huge, but costs are going up too fast and fares are not as affordable as they used to be,” Fernandes said.

“There needs a little bit of a rethink [of the aviation industry] in Indonesia.”

Source: http://www.thejakartaglobe.com/business/airasias-fernandes-refuting-mandala-bid/

[flee 5]

Tiger Airways to Shut Down Mandala Venture Amid Restructuring

 

Tiger Airways Holdings Ltd. (TGR), the unprofitable low-fare carrier part-owned by Singapore Airlines Ltd. (SIA), said its Indonesian venture will stop flying, as the budget airline tries to restructure operations.

Mandala will cease operations from July 1, Tiger Air said in a statement to the Singapore stock exchange today. Mandala wouldn’t be able to sustain its operations and the airline’s key shareholders decided to cease funding the carrier, Tiger said in the statement. The Singapore-based budget carrier had last year increased its stake in the venture to 35.8 percent.

“Mandala’s financial results reflect the challenges that it is facing in the difficult operating environment,” Tiger Air Chief Executive Officer Lee Lik Hsin said in the statement. “The partners in Mandala have jointly come to the conclusion to cease funding the airline’s operations.”

Tiger Air is grounding planes and canceling aircraft orders as part of a restructuring after mounting losses led largest shareholder Singapore Air to name a new CEO for the low-fare airline. The restructuring efforts are symptomatic of the challenges budget airlines face in Southeast Asia, where competition among half a dozen carriers has pushed fares down.

Source: http://www.businessweek.com/news/2014-06-18/tiger-airways-to-shut-down-mandala-venture-amid-restructuring

[Din Hilmi 0]

Four of the Tiger Mandala aircraft is being parked at remote stand next to MTB. Wonder why they parked it here instead of their home base..

 

 

Forgot to jotted down the rego though..

[flee 5]

Might be due to insufficient space at the SAE site. They were sitting out there for a while now and the ceasing of operations would mean that these aircraft will probably be returned to lessors.