AirAsia has cancelled a USD $80 million deal to acquire Indonesian airline Batavia Air. The deal was called off because it “induced too many risks” for shareholders due to Batavia’s existing debt and aging fleet.
Speaking about the aborted deal, AirAsia CEO Tony Fernandes said: “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. Our aggressive focus in Indonesia remains and we will push our Indonesian IPO plans while still maintaining close co-operation with Batavia Air.”
Batavia Air has said it will carry on business as normal, and will cooperate with AirAsia in other areas such as pilot training.
Although AirAsia is the largest budget airline in Asia, it controls only 2% of the Indonesian market, which is expected to grow rapidly in the near future. Batavia Air currently controls 12% of this market.