Bloomberg News

ANA to Buy Stake in Myanmar Airline as Yangon Lures Business (1)

August 27, 2013

ANA Holdings Said to Buy Stake in Myanmar’s Asian Wings Airways

Travelers queue in front of the Asian Wings Airways check-in counters, in this photograph taken with a tilt-shift lens, at the domestic terminal of Yangon International Airport in Yangon. Photographer: Brent Lewin/Bloomberg

ANA Holdings Inc. (9202), Japan’s largest airline, will buy a stake in Myanmar’s Asian Wings Airways Ltd. as the Southeast Asian nation opens its economy for overseas investments.

The Japanese carrier will pay $25 million for a 49 percent stake in the Myanmar company, the Tokyo-based airline said in a statement today.

ANA joins Coca-Cola Co. (KO:US), PepsiCo Inc. (PEP:US) and Unilever Plc in expanding in the nation of 64 million people, after the U.S. eased sanctions last year as Myanmar moved toward democracy following five decades of military rule. South Korea’s Incheon International Airport Corp. won a $1.1 billion contract this month to build a new international airport for Yangon, Myanmar’s largest city, to increase passenger capacity fivefold on expectations of soaring demand.

“There’s still a lot more room for growth in travel in Asia,” Toshiaki Nonaka, a director of strategic planning at ANA, told reporters in Tokyo today. “We want to actively go and seize that growth. With this tie-up we’re expanding our base for flights to other Asian countries.”

Asian Wings, based in Yangon, is a closely-held airline that started flying in 2011 and operates three Avions de Transport Regional ATR72 planes and an Airbus SAS A321, according to its website. It operates routes to “all major tourist destinations” in Myanmar, according to the site.

Tripling Fleet

The carrier will add 10 Airbus A320s to its fleet over the next five years, and boost its ATR aircraft to four, more than tripling its fleet to 15 planes, said Nonaka. ANA is considering leasing the Airbus planes to Asian Wings and may invest in new technology for its ticketing system as well, he said.

ANA restarted flights to Myanmar last year, for the first time in 12 years, as sanctions against the country were eased.

The airport at Myanmar’s capital Naypidaw, the nation’s biggest with a capacity to handle 5 million passengers, is served by 18 international carriers.

The new airport in Yangon will be able to handle 12 million passengers a year when it opens for business in 2018. The city’s existing airport is also aiming to more than double its capacity to 5.5 million by 2016.

Travel Demand

ANA’s acquisition will be its first of a new airline since the company raised 174 billion yen ($1.8 billion) in a share sale last year for acquisitions and aircraft purchases. All Nippon Airways, the main carrier of ANA Holdings, said earlier this year it was looking for acquisitions and partnerships in countries including India, Thailand and Myanmar after raising money in the share sale.

“It will help them tap growing travel demand in Southeast Asia,” Ryota Himeno, an analyst at Barclays Securities Japan Ltd., said of the Asian Wings purchase. “It’s a step in the right direction, but they need to make more investments to make the best use of their capital.”

Last month, ANA announced it would buy pilot training company Pan Am Holdings Inc. for $139.5 million. The carrier also held preliminary discussions on buying a stake in Philippine Airlines Inc. from San Miguel Corp. (SMC), the owner of a 49 percent stake in the Manila-based carrier, it said in July.

ANA fell 0.5 percent to 208 yen at the close of trading in Tokyo today. The stock has advanced 15 percent this year, compared with a 30 percent gain in Japan’s benchmark Nikkei 225 Stock Average.

To contact the reporter on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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