davita

Well-Known Member
Mar 13, 2012
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As it may affect some members who plan to buy tickets to fly Air Asia, or some other minor domestic airlines, in the coming months...here is a link to a report in yesterday's Jakarta Post Business....No grace period for ailing airlines | The Jakarta Post

To summarize....airlines with negative equity after Sept 30 will lose their permit to fly. Air Asia Indonesia is a major airline within this 'at risk' group and they plan to raise equity by selling bonds....but, apparently, no plan B if they cannot sell enough.
It's an Indonesian regulation that not more than 49% of Airline capitalization be owned by foreigners....yet who else would they expect will buy bonds of an airline that has consistantly lost money, and owes more than its value....beats me!
Air Asia Indonesia lost US$48M last financial year and US$12M in 2013.

IMO this situation was created by the aviation ministry itself by budging into the price of seats...not only did they cap the cost of a full-fare, they raised the price of the minimum fare, thus reducing competition on domestic routes.
All RI domestic airlines lost customers in the 1st half 2015 compared to same in 2014.
 

davita

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Mar 13, 2012
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Good news in today's Jakarta Post, particularly for Australians, is that Indonesia Air Asia X will fly non-stop Bali-Sydney 5 times a week from Oct 17 2015. They are already promoting one-way fare of Rp1.19m (AUD119) if booked before Aug 16, for flights from Oct 17 till Aug 31 2016.
This will put 1885 more seats a week on this route so should provide competative pricing from other airlines.

I'm not 100% sure but don't think my above post will have anything to do with this flight as the Air Asia X is a different company to Air Asia Indonesia, and therefore different financial regulations.
 

spicyayam

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Jan 12, 2009
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It makes me wonder why airlines are such money losing operations. Why don't they just increase their prices to adequately cover their costs?
 

AndrewD

New Member
Mar 23, 2010
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Melbourne
Airasia's equity...

“We will sell perpetual bonds, which will be treated as equity in accounting terms.” The important part of that sentence is "will be treated as equity in accounting terms" So the books will show increased equity but the purchasers of the bonds will not actually be getting equity.

The Ministry can then be happy that foreignors have not gained ownership of the airline whilst also being impressed that the equity balance has been made positive.

If Airasia can pull this off, I too will be impressed.
 

Markit

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Sep 3, 2007
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So the books will show increased equity but the purchasers of the bonds will not actually be getting equity.

What does the buyer of these bonds then actually get? I presume they are listed in US dollars and not IDR as must everything else here in Indo, since recently.
 

davita

Well-Known Member
Mar 13, 2012
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By Sept 30 2015, the RI government will dictate who has the permit to operate an airline according to RI regulations on negative equity.

My intention in post #1 was to alert any members to the fact that, after that date, any tickets they may hold on Air Asia Indonesia may be invalid.

I agree with Markit and AndrewD's observation....how, when and if?