AirAsia cools on Air Batavia
AirAsia has set out the reasons it is walking away from a July agreement to acquire Indonesia’s Air Batavia.
AirAsia said after "extensive study and discussion, the diverse nature of the two businesses has prompted an alteration to the initial agreement".
In a statement AirAsia explained, "The precise scale of integration, including a re-fleeting exercise as well as streamlining an amalgamation of cultures is expected to take up considerable time and effort, joint resources which can be more efficiently utilised in a targeted manner."
Air Asia Group CEO Tony Fernandes said, "We always knew it was not going to be an easy transaction.
"Our aggressive focus in Indonesia remains and we will push our Indonesian IPO plans while still maintaining close co-operation with Batavia Air.
"In our minds, the timing was perhaps not appropriate as it would have induced too many risks and would ultimately be earnings dilutive to our shareholders."
The proposed tie-up between the parties will now embrace ground handling, distribution and inventory systems.
A separate aviation training joint venture will be established between Batavia Air and AirAsia Indonesia to address an expected skilled pilot shortage in Indonesia.
Ian Jarrett
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