Wednesday, 17 October 2007：According to a report by the Centre of Asia Pacific Aviation (CAPA), private equity firms are progressively directing their investment focus on low cost long-haul carriers. However, not all carriers are profiting from this interest.
Japan’s Orix Group and Bahrain’s Perigon Capital recently acquired 10 percent stakes in Malaysia’s AirAsia X for US$37.5 million a piece. Even though AirAsia X is yet to fly a single passenger, the airline is already valued at over US$375 million and has enough start-up funds to see it through the next few years. CAPA believes that AirAsia X is also aiming to raise US$300 million in an IPO by 2010.
The story is completely different for Virgin Blue. According to CAPA, Virgin Blue presents itself as an interesting proposition to private equity investors in that it carries much less political baggage than Qantas and is essentially four airlines in one (Virgin Blue, Pacific Blue, Polynesian Blue and V Australia).
Despite this, Emirates, Air New Zealand and Singapore Airlines have all indicated their lack of interest in Virgin Blue. What’s more, Virgin Blue’s major shareholder Toll Holdings has suggested that it could exit the carrier altogether.
While the Virgin Group may raise its 26.5 percent holding in Virgin Blue, CAPA believes that a partnership with private equity investors will allow Branson to leverage his position and Virgin Blue’s assets.
