Japan’s largest aviation group ANA Holdings Inc will buy a stake in Myanmar’s Asian Wings Airways (AWA) Ltd as part of an international expansion strategy, which will make it the first foreign investor in Myanmar's nascent aviation industry.
The Japanese carrier will pay $25 million for a 49 percent stake in the Myanmar company, the Tokyo-based carrier said in a statement last week.
As part of the investment, ANA will work with AWA to improve its operational and on-time performance and support its expansion into markets outside Myanmar, ANA said.
Yangon-based Asian Wings started flying in 2011 and operates three Avions de Transport Regional ATR72 planes and an Airbus SAS A321, according to its website.
AWA now only operates domestic services, however, it plans to inaugurate international routes from October with a flight between Yangon and Chiang Mai, Thailand. For the fiscal year ending March, AWA reported revenue of $17.8 million.
AWA also aims buy 10 more Airbus A320 jets by 2018 as part of its expansion plans, Lwin Oo, executive director of Asian Wings, said on Wednesday last week.
“ANA will provide us the assistance to gain internationally recognised standards of safety and services,” Lwin Oo said.
All Nippon Airways, the main carrier of ANA Holdings, restarted flights to Myanmar last year following a 12-year hiatus.
ANA said the investment in AWA is in line with its group corporate strategy for financial year 2013-15 which involves diversification into new growth areas, centred primarily around airline-related businesses particularly in Asia.
ANA’s acquisition will be its first of a new airline since the company raised $1.8 billion in a share sale last year for acquisitions and aircraft purchases. ANA 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.”
In July, 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, the owner of a 49 percent stake in the Manila-based carrier.
ANA joins Coca-Cola, Pepsi and Unilever in expanding in the nation of about 60 million people, after the US 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 last month to build a new international airport in Bago to increase passenger capacity fivefold on expectations of soaring demand.
The new airport will be able to handle 12 million passengers a year when it opens for business in 2018. Yangon International Airport is also aiming to more than double its capacity to 5.5 million by 2016.
“Our aviation sector is still very underdeveloped in Southeast Asia. We expect the country to boom in the near future and if so, the aviation sector will also develop,” Kyi Win, chief executive of Asian Wings, said.