Citilink and AirAsia refuses at acquiring Tiger Air Mandala in Indonesia

JAKARTA - Consider it as a double blow within a week time. Struggling Tiger Airways subsidiary in Indonesia, Tigerair Mandala has seen both Citilink and AirAsia denying to acquire the airline within a week time. Singapore-based Tiger Airways Holdings has been looking at selling for a while its 35.8% participation in Mandala Air, as the low cost carrier recorded six consecutive quarterly losses. During the last quarter ending in March, the Indonesian low cost airline showed a loss of $76.25 million.

Since earlier this year, rumours have regularly surfed of the possibility for Tiger Airways Holdings to get rid off its Indonesian subsidiary, run in a joint venture with the Indonesian Saratoga Capital. Tiger already reduced dramatically its network and fleet in Indonesia.

Tigerair Mandala has now only a fleet of four Airbus A320 –compared to nine earlier this year- and flies now to only eight destinations, including Bangkok, Hong Kong and Singapore internationally. Since February, the carrier suspended nine routes with capacity now down by over 30% compared to a year ago. Both Saratoga Capital and Tiger Airwants to get out of their joint venture by July.

The AirAsia Group looked to be the other potential investor interested to acquire Tigerair Mandala. Until last Friday, as the airline executive Tony Fernandes finally confirmed to news agency Reuters to drop the idea of taking over the carrier. Instead, the carrier wants to grow its business within and continues to consolidate its Indonesian operation. AirAsia plans to invest some US$300 million a year in Indonesia, including the set up of a long haul subsidiary in Bali Indonesia AirAsia X.

In Indonesia, AirAsia operates 30 Airbus aircraft as of the end of last year and transported 7.85 million passengers, up by 34% over 2012. Most airlines in Indonesia are currently struggling due to combined negative factors of rising costs because of the Rupiah weakness –down in one year by 25%- and increased competition.

Sourced: TravelDailyNews