Indonesia's Lion Group buying ATR planes worth $1 billion in Asia expansion

Thu Nov 27, 2014 4:03am EST
 
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By Anshuman Daga

SINGAPORE (Reuters) - Indonesia's Lion Group is buying an additional 40 aircraft from ATR for $1 billion at list prices, the companies said, in a move that will make Lion the biggest customer of the European manufacturer.

The purchase order will be signed on Thursday in Rome by Lion's co-founder Rusdi Kirana and ATR's CEO Patrick de Castelbajac in the presence of Italian Prime Minister Matteo Renzi, Lion said in a statement.

Kirana's Lion Air, Indonesia's biggest and one of the world's fastest-growing airlines, has captured global attention with record purchases of jets from Boeing and Airbus over the past few years. Airlines usually get large discounts from manufacturers on list prices.

Despite rival airlines deferring orders, Kirana is pushing forward with Lion's expansion plans and buying new planes to tap Indonesia's rapidly growing consumer class, as well as to compete with Malaysia's AirAsia.

"These additional 40 ATR 72-600s will be used to meet the growing demand forecast over the next five years both within the Group's existing operators' networks and to develop other opportunities for ATR operations throughout Asia and developing markets worldwide," Lion said.

ATR is co-owned by Airbus group and Italian industrial conglomerate Finmeccanica.

So far, Lion has taken deliveries of over 40 ATRs. The turboprop aircraft fly more slowly than jets, but their lower fuel consumption means they are increasingly popular in growth markets such as Southeast Asia and Latin America.

Operating turboprops is part of Lion's strategy to fly in remote locations in Indonesia and Malaysia and it also uses one ATR in Thailand. Deliveries of the turboprops from Thursday's order will start in 2017 and run into 2019. The latest deal boosts Lion's total ATR orders to 100.

(Editing by Stephen Coates and Muralikumar Anantharaman)

 
Indonesia's Lion Air President Rusdi Kirana poses before an interview with Reuters in Paris, November 12, 2014. REUTERS/Christian Hartmann