ZestAir shareholders to infuse $100 M

MANILA, Philippines - All shareholders of budget airline Zest Airways Inc. including AirAsia Inc. Philippines committed to invest $100 million to recover heavy losses incurred during the suspension of its operations last month.

ZestAir chairman Michael Romero said in an interview with The STAR that all shareholders of the airline have committed to infuse $100 million between May and December this year.

“The total investment for now in ZestAir is $100 million from all shareholders. So from May 2013 until December, the total is $100 million and a total of 16 aircraft. That is our commitment,” Romero said.

 ZestAir, owned by Alfredo Yao entered into a strategic alliance agreement with AirAsia Philippines last March 11.

 Under the agreement, AirAsia Philippines would acquire 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.

The transaction was consummated last May 10, wherein Yao’s ZestAir got $16 million as well as 13 percent interest in AirAsia Philippines

After the transaction, AirAsia Berhad of Malaysia now owns 40 percent of AirAsia Philippines while Filipino investors led by Romero, Yao, Marianne Hontiveros and Antonio “Tonyboy” Cojuangco Jr. control 60 percent.

 A source said AirAsia Philippines alone is infusing $30 million in additional investments into ZestAir on top of the investments made in the acquisition of the 40 percent interest in the budget airline.

 Philippines’ AirAsia has decided to temporarily suspend flights to Davao, Kalibo, Taipei and Hong Kong from the Clark International Airport in Pampanga starting Oct.9 to shore up its resources.

CAAP suspended the permit to fly or Airline Operators Certificate (AOC) of ZestAir last Aug. 16 due to several violations of the Philippine Civil Aviation Regulation (PCAR). The suspension was lifted by the CAAP last Aug. 19 but the four-day suspension resulted in losses amounting to P280 million or P70 million per day and affected close to 8,000 passengers.

Hontiveros, chief executive officer of AirAsia Philippines, said the suspension of the airline’s operations in Clark would be temporary as it intends to resume Clark – Hong Kong flights from Dec. 20 to Jan. 6 next year to cater to the strong holiday demand.

 â€œThe temporary suspension is primarily to manage costs following the recent grounding of Zest Air by CAAP. This has affected many factors and allocating necessary resources such as aircraft and crew is critical to ensure its recovery,” she said in a statement.

 She pointed out that AirAsia Philippines needs to shore up its resources to be able to support the operations of ZestAir that currently operates a fleet of 12 aircraft.

 â€œRight now we need to focus our resources to support Zest Air where we have significant economic interest, and we believe in ZestAir’s potential with their Manila based operations,” she added.

Hontiveros said affected guests holding flight bookings for these flights would be notified of the route suspension via their registered member email account as well as an SMS notification.