Lion Air secures Ex-Im Bank loan

FINANCING PLAN: US$1.1 billion will be used for the purchase of 27 Boeing aircraft

INDONESIA'S Lion Air, whose parent PT Lion Group owns a 49 per cent stake in Malindo Air, has secured a US$1.1 billion (RM3.41 billion) loan from the Export-Import Bank (Ex-Im bank) of the United States to buy 27 Boeing 737-900ER aircraft, some of which are for the fledgling Malaysian-based carrier.

PT Lion Group chief executive officer Rusdi Kirana said aircraft delivery from this year until 2014 will be for Lion Air, Malindo Air and Batik Air.

He added that the airline is also getting financing from German commercial banks, without specifying the details.

Ex-Im Bank said in a statement the financing will support a portion of Lion Air's outstanding orders for B737-900ER aircraft, which includes 230 Boeing 737s ordered in November 2011.

It is the largest commercial aircraft order in aviation history.

"The authorisation is a final commitment of a preliminary offer of financing that the bank approved in 2011," the bank said.

Meanwhile, Malindo Air, which is starting its maiden flight to Kota Kinabalu on March 22 and to Kuching a day later, is expecting to break even by year-end, said Rusdi.

"We have operated B737-type aircraft in Indonesia for the last six years. We have the capability and inventory, in terms of spare parts and spare engines. So, for Malindo Air, the economies of scale are already there," he said after the signing of an agreement between Malindo Air and its new management staff yesterday.

Malindo Air is offering an all-inclusive fare of RM38 to Kuching and RM68 to Kota Kinabalu, with add-ons such as personal TV for in-flight entertainment and WiFi at a small cost.

Malindo Air chief executive officer Chandran Ramamurthy said the fares are inclusive of the passenger service charge or airport tax, fuel surcharge and administration fee.

He added that the promotional fares will last until October.

The new airline will have four flights daily to Kuching and three daily to Kota Kinabalu.

Ramamurthy said Malindo Air is aiming for an average load factor of 85 per cent to 90 per cent.