Indonesia AirAsia may disappear in merger
Friday, 02 Oct, 2015
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AirAsia has reportedly said its short haul Indonesian unit is to close down.
However the airline’s large Indonesian customer base needn’t panic.
Indonesia AirAsia will merge with local long haul unit Indonesia AirAsia X in order to circumvent financial requirements by the Indonesian authorities, according to a report by Indonesian media outlet Tempo.
The merger is to combat the threat of having Indonesia AirAsia’s operating permit revoked due to its negative equity, said Suprasetyo, the Indonesian director general for air transportation.
By transferring all operations to Indonesia AirAsia X, the company can continue to fly, Suprasetyo said.
"Indonesia AirAsia X’s equity is not negative because it hasn’t been audited as its operation is still less than a year old. Indonesia AirAsia is no more."
AirAsia has yet to officially confirm this.
The combined Indonesia AirAsia X business would have to go through the administrative task of submitting a new business plan and process permits again for Indonesia AirAsia’s routes.
Indonesia AirAsia is one of 13 airlines based in the country that are in negative equity and have been ordered to secure sufficient funding or face being grounded.
The official deadline for this expired on September 30.
The new rule was brought in to ensure all airlines have access to funds to maintain safety standards following a number of high profile air crashes.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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