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ANA to buy 49% stake in Myanmar air carrier

Bloomberg, AFP-JIJI

ANA Holdings Inc., Japan’s largest airline, said Tuesday it will buy a 49 percent stake in Myanmar’s Asian Wings Airways Ltd., becoming the latest firm to expand in the Southeast Asian nation.

ANA will pay $25 million for the stake in the Myanmar company, the Tokyo-based carrier said in a statement.

The deal would be the first in the airline sector by a foreign firm since Myanmar began democratizing in 2011, according to the Nikkei newspaper, which initially reported the acquisition. With demand for travel in Japan expected to remain largely flat because of the graying, shrinking population, ANA is trying to capture rising demand in Southeast Asia.

ANA joins Coca-Cola Co., PepsiCo Inc. 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 Tuesday. “We want to actively go and seize that growth. With this tie-up, we’re expanding our base for flights to other Asian countries.”

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

Asian Wings, based in the commercial hub of Yangon, operates domestic flights connecting 13 cities. It will also begin an international service this October on a route connecting Yangon and Chiang Mai, Thailand.

The Myanmar carrier is considered a midtier player in an industry packed with nine airlines, including the government-run Myanmar Airways.

In October, ANA restarted direct flights from Narita to Yangon after a 12-year hiatus, pointing to the rising number of business travelers and tourists headed to Myanmar. It will employ larger aircraft and make the currently three-flights-a-week service daily from the end of September.

The airport at Myanmar’s capital, Naypyitaw, 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.

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