Philippines AirAsia (PAA) will take a 49% stake in Zest Air as part of a strategic alliance between the two low-cost carriers.
Under the agreement between Philippines AirAsia and Zest's majority shareholder Alfredo Yao of AMY Group, PAA will take a 49% stake in Zest Air and 100% of Asiawide Airways, which owns Zest's aircraft. In turn, Yao will take an unspecified stake in PAA.
Philippines AirAsia will also infuse funds into Zest to support its working capital and the two airlines will continue to operate separately, its spokeswoman says.
The alliance is still subject to "various regulatory approvals to be obtained prior to completion of the transaction", the two airlines said in a statement.
PAA chief executive Marianne Hontiveros said that the other shareholders in the company welcome Yao's investment as he "shares a common vision to provide passengers with the best value fare possible which enables them to fly to various destinations". PAA is 40% owned by Malaysia's AirAsia, with the remaining 60% held by three local investors.
Hontiveros adds that Zest's mix of domestic and international operations and its hub at Manila's Ninoy Aquino International airport will complement PAA's operations from Clark.
"The Philippines aviation market has tremendous upside potential," says PAA chairman Antonio Cojuangco. "Bringing these two carriers together will definitely realise this potential."
The two airlines confirmed in September last year that they were in talks on a strategic alliance, and PAA had been seen as a natural bidder for a stake in the airline.
Last year Zest put on hold plans to acquire Airbus A330s and expand into long-haul routes after a number of its senior managers left the company. That included its then head of marketing Alfredo Herrera, who was appointed as the head of commercial at PAA.
Zest, which was previously Asian Spirit Airlines, operates a fleet of 10 Airbus A320s, one A319 and four Xian MA60s, while PAA operates two A320s and has orders for a further three aircraft.