Heard of Lion Air? If you’re from Europe, possibly not, as the company is banned from flying in the E.U. over safety concerns. However, this little-known Indonesian air carrier, launched 13 years ago by an ex-typewriter salesman with just one plane, has recently struck two of the world’s largest aircraft orders in a staggering $46 billion bet on Indonesia’s air transport boom.
On Monday, Indonesia’s fastest-growing airline signed the world’s biggest ever order when it agreed to buy 234 medium-haul A320 jets worth €18.4 billion or $23.8 billion from European aerospace giant Airbus. The French President Francois Hollande described the deal as “historic”.
This deal comes a mere 2 years after Lion Air astounded the industry with a $22.4 billion agreement inked for 230 Boeing 737 airliners.
Little is known about Lion Air’s 49 year old CEO Rusdi Kirana, who started the low cost airline with his older brother just over a decade ago. Kirana’s business career started as a teenager selling American “Brother” typewriters. His brother financed him through school and they later set up a successful travel firm together, then the airline Lion Air. in June 2000.
Three months later Kirana seriously considered the idea of selling for $1 million, but says his wife talked him out of it.
These days, the two brothers and co-owners are still contemplating floating the company for more than $1 billion, but have postponed the offering due to the uncertain state of the markets. To those who have raised concerns about the air company’s ability to finance these record breaking deals, Kirana’s message is simple: “We don’t like to show people a lot, we just want to work. You can call my bankers. They won’t finance a company that isn’t very good.’
Bertrand Grabowski, the top DVB director in charge of aviation, said the German bank had financed several aircraft for Lion Air and was “very impressed” with its growth so far
Boeing, Western banks and even the US government now have huge stakes in Lion Air’s continuing success, the 2011 agreement will help to support more than 110,000 US aerospace jobs and the recent airbus will have a similar effect in France.
Lion Air’s recent moves have generated positive public relations, however, the company’s rise has not all been smooth and it still faces difficulties with its image. Not only does it have a reputation for delays but it is also banned by the European Union under a move originally applied to all Indonesian airlines over safety concerns, treatment which Kirana calls unfair.
Lion Air has also taken a knock from a recent drugs scandal involving two pilots and crystal meth. The fallout is ongoing, with the drugs agency suggesting many other pilots could have problems. Kirana denies this and says he is working closely with the agency to resolve the issue.
Kirana would rather be known for Lion’s Village,the affordable housing and office complex he is currently setting up for 4,000 of his workers close by Jakarta Airport. For Lion Air to fulfill its dream of grabbing 60 percent of the domestic flight market, it desperately needs more pilots and technicians. The prospect of no commuting, notoriously time consuming in Jakarta and brand new accommodation will no doubt prove attractive. “I am building new offices with houses next door. I say ‘how much do you pay for transport each month?’ They tell me and I say, ‘OK pay that for the house then after 10 years it is yours’.”
Sources include The Kakarta Globe, Japan Times, Lion Air wiki
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