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NEWS UPDATES Asean Affairs   26 November 2010

AirAsia Indonesia to Surpass Malaysia Business

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AirAsia Bhd. Chief Executive Officer Tony Fernandes said the carrier's Indonesian operations may surpass its Malaysian unit, which is now more than three times as big.

The Indonesia business may pass Malaysia in the "not-too- distant future," Fernandes said today in a TV interview in Kuala Lumpur, without elaboration. "We're really in the best playground for growth."

Southeast Asia's largest budget carrier more-than-doubled third-quarter net income as it grows its main Malaysian unit and ventures in Indonesia and Thailand to take advantage of rising regional travel demand. The airline plans to add as many as 12 planes a year and is targeting opportunities in Vietnam, the Philippines, India and China, Fernandes said.

"We believe that the market has underestimated AirAsia's growth potential in riding the sector recovery," Juliana Ramli, an analyst at HwangDBS Vickers Sdn. in Kuala Lumpur, wrote in a note to clients today. The analyst recommends buying the stock.

AirAsia rose 5.5 percent to 2.69 ringgit at 11:49 a.m. in Kuala Lumpur. The stock has risen 95 percent this year compared with a 19 percent gain on the FTSE Bursa Malaysia KLCI Index.

The carrier, based in the Malaysian capital, reported net income of 327.3 million ringgit ($104 million) for the third quarter, with sales climbing 34 percent to 987.6 million ringgit, the company said yesterday.

Indonesia AirAsia's passenger number rose 8 percent to 1.1 million in the quarter, according to a statement. The Malaysian operations boosted passenger numbers 12 percent to 4 million, it said.

Malaysian Airline System Bhd. returned to profit in the same period to Sept. 30, reporting net income of 233.2 million ringgit, it said in a separate exchange filing yesterday.

AirAsia could also be "very interested" if Airbus SAS decides to offer a revamped version of its A320 single-aisle plane with a new engine, Fernandes said. The Toulouse, France- based planemaker has said it is considering such move.

Airbus is already working through orders for 175 A320s from AirAsia, according to data on its website.

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