Lion Air roars with $44b in orders
Lion Air, a little-known carrier launched 13 years ago with just one plane, has struck two of the world's largest aircraft orders in a staggering $US46 billion ($44.3 billion) bet on Indonesia's air transport boom.
France announced on Monday that Indonesia's fastest-growing airline had agreed to buy 234 medium-haul A320 jets worth $US23.8 billion from European aerospace group Airbus.
The agreement was signed at the Elysee Palace by Airbus head Fabrice Bregier and his Lion Air counterpart, Rusdi Kirana.
The deal comes after Lion Air astounded the industry with a $US22.4 billion agreement for 230 Boeing 737 airliners, inked in 2011 as a visiting US President Barack Obama looked on.
The impressive orders are in sharp contrast with the size of the company, which is banned from American and European skies over safety fears.
Founded in 1999 by brothers Kusnan and Rusdi Kirana, who are ranked the 33rd-richest Indonesians with collective wealth of $US900 million, Lion Air is the first private airline in Indonesia.
It operates a relatively modest 92 planes, mostly Boeings, which makes it ninth among regional carriers in terms of fleet size.
Its 72 destinations are mostly in Indonesia, and the furthest it flies is to Saudi Arabia, a route mostly packed with domestic workers and construction labourers.
Nevertheless, the company has huge ambitions and is betting big on the formidable expansion of air transport in Indonesia, which is experiencing passenger growth of about 20 per cent every year.
With 240 million people, Indonesia is the world's fourth-most populous nation, and embraces more than 17,000 islands scattered across 33 provinces.
Annual economic growth exceeds 6 per cent and the country has a burgeoning middle class which is keen to abandon travel by bus, ferry and train and instead take to the skies for holidays and family visits.
Despite its regulatory woes, Lion Air is intent on spreading its wings internationally, and is expected this year to launch its long-haul arm, Batik Air, with six Boeing 737s and five 787 Dreamliners.
Last September it also announced the launch of another offshoot, Malindo Airways, which will begin regional operations in May from Malaysia, the home turf of Lion Air's main rival, AirAsia.
Centre for Asia Pacific Aviation analyst Brendan Scobie said the vast potential of Indonesia's aviation market, and the scope for offshoot carriers, supported the scale of Lion Air's orders.
"They see an increase in demand that is brought on by the conditions in the home market," Mr Scobie, of the centre's Singapore office, said.
"If you look at the projections for growth in Indonesia, assuming that Lion maintains its current market share and leading position, they are going to need a few hundred more aircraft just to keep that position.
"They also have an ambition to play more in international markets and to open up affiliates in other countries."
Observers said Lion Air wanted to replicate the success of AirAsia, the low-cost pioneer that has flourished from its Kuala Lumpur base.
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