AirAsia eyes higher stake in ZestAir

MANILA, Philippines - Clark-based AirAsia Inc. (Philippines), a unit of low cost carrier AirAsia Berhad of Malaysia, is open to further increasing its stake in Zest Airways Inc. 

AirAsia Philippines president and chief executive officer Maan Hontiveros told reporters that the low cost carrier is looking at further raising its interest in ZestAir after successfully buying a 49 percent stake last March.

 â€œZest is attractive to us that is why we invested in it in the first place. We would be very open to that (increasing its stake) but that has to be under discussion with Mr Yao,” Hontiveros said.

Zest Airways Inc is owned by businessman Alfredo Yao. AirAsia Philippines and ZestAir entered into a strategic alliance agreement last March 11. Under the partnership, Philippines’ AirAsia would invest in ZestAir by acquiring a 49 percent stake in Zest Airways and 100 percent in Asiawide Airways.

The investment in ZestAir complements the strategies for future growth of AirAsia Philippines which operates out of Clark while ZestAir operates at the Ninoy Aquino International Airport (NAIA).

Last May 10, AirAsia Philippines completed the acquisition of an 85 percent economic interest and 49 percent voting rights in ZestAir as well as a 100 percent interest in Yao’s Asiawide Airways Inc.

In exchange, Yao’s ZestAir got $16 million as well as 13 percent interest in AirAsia Philippines that operates two Airbus aircraft.

ZestAir is controlled by Yao through AMCY Holdings while AirAsia Group through chief executive officer Tan Sri Tony Fernandes has a 40 percent interest in AirAsia Philippines together with Filipino shareholders including Hontiveros, Antonio “Tonyboy” Cojuangco Jr., and Michael Romero.

Hontiveros said the possibility of increasing AirAsia Philippines’ stake in ZestAir has already been brought to Yao’s attention.

“We’ve discussed it but I don’t want to preempt what Mr. Yao wants to do. We are open but the initiative will have to come from Mr. Yao. It depends on how much more he is willing to relinquish,” she added.

According to her, any additional investment in ZestAir would have to be approved by Congress.

“They (ZestAir) have a Congressional franchise and under that franchise agreement any material change in the ownership structure will need Congressional approval,” she explained.

Hontiveros explained that there is no limit as to the stake AirAsia Philippines could acquire in ZestAir since it is majority owned by Filipinos.