MANILA, Philippines – Local budget carrier Zest Airways Inc. is firming up a deal to sell up to 40% of the airline to a foreign airline by the end of the year.
“Hopefully, it can be finished within the year,” said Zest Air president Alfredo Yao when asked about the target for the closing of the deal.
About 3 foreign groups, including a Chinese carrier Hainan Airlines Company Limited, have expressed their interest already, Yao said.
“There are two, maybe 3. We are still choosing. There was supposed to be an agreement already with one but then there came along two more. So, there’s going to be a beauty contest,” he added.
He declined to name the two other interested airlines except that they are from within the region.
The former businessman, who transformed himself to leading a budget airline after his success in Zest-O drinks firm, said the foreign partner they will choose should have the financial muscle and the technical expertise.
“Whoever we will end up with should be able to contribute something to Zest Air whether financially or maybe for our IPO (initial public offering), or even help us in servicing our aircraft. It is better to have a partner,” Yao said, stressing that ZestAir can’t do it by itself amid the rising cost of jet fuel and spare parts.
Foreigners are limited to own oly up to 40% in a local airlines.
Zest Air, formerly Asian Spirit, is in its fourth year of operation. Yao said the IPO may take place possibly in the next two years.
That airline has a fleet of 12 Airbus A320 and Yao said they are looking at buying 3 aircraft per year.
In 2011, Zest Air flew 2.3 million passengers, of which 2.1 million are domestic passengers and 200,000 from its international operations. Its revenues reached P6 billion.
On June 11, the officials of the Yao-led airline said they have in the works efforts to “refresh” the airline before its re-launch in the 4th quarter this 2012.
Zest Air, the country’s 4th largest carrier, has been seen as the most vulnerable in an industry with 5 strong and growing industry players.
However, the Philippines is poised to increase tourist arrivals with targets doubled to 6 million a year by 2016. Airlines have been beefing up their fleet and network to take advantage of the opportunities
Almost 100% of tourists that visit the Philippines arrive by air.