4 foreign firms eye Zest Air

MANILA, Philippines - Four foreign carriers have approached Zest Airways for possible equity infusion and operational partnership agreement.

“Three or four airlines approached us to partner with us,” Zest Air president and chief operating officer Alfredo Yao revealed.

He said these are carriers from North Asia, the Middle East and other regions proposing to invest in Zest Air and/or establish joint operations with the budget airline.

“We are giving it a serious study but none has been finalized yet. If they can’t give something new to Zest Air, then we are not partnering with them,” Yao said.

Zest Air is currently under a five-year refleeting program which aims to add up to four aircrafts to its fleet every year.

“We are looking at adding four aircraft every year up to 2015,” Yao said, adding that the fleet expansion is in line with the airline’s entry to more local and regional destinations.

Butch Rodriguez, senior vice-president for commercial and external affairs, said Zest Air is acquiring additional four aircraft this year with delivery of one aircraft in May, June, August and December.

He said acquisition of aircraft this year is funded by the company’s internal cash flows but fundings for the proceeding years will be raised through borrowings.

The aircraft, which will be a combination of leased and owned, will require about $10 million each for leased and about $25 million for owned.

The new planes will be deployed to additional five local destinations and three to four regional destinations set to belaunched this year. This will bring Zest Air’s network to 24 domestic destinations, from 19, and eight or nine international destinations, from just five now.

“Hopefully, we were able to secure traffic rights to Kuala Lumpur, Bangkok, Jakarta and Singapore and launch flights there,” Rodriguez said.

Zest Air flew 1.23 million passengers in 2010 and generated about P2.2 billion in revenues. For the first quarter, Rodriguez said results were “better than expected.”

He said revenues grew 30 percent to about P700 million in the first three months due to but yields per passenger have gone down.