No-frills airline AirAsia today named three foreign partners who will inject US$26 million to enable the profit-making carrier to expand regionally.

The investors are the Bahrain-based Islamic Development Bank (IDB), Gulf-linked Crescent Venture Partners and Deucalion Capital, a Frankfurt-based global private equity fund, the airline said in a statement.

The new partners invested in AirAsia at a valuation of US$100 million, and IDB now holds 10 percent, Crescent nine percent and Deucalion seven percent.

Malaysia's Tune Air, which acquired a 99.25 percent stake in AirAsia on takeover from DRB Hicom in December 2001, now holds 73.41 percent of the enlarged share capital.

Expansion plans

"The newly injected capital will be used to further enhance AirAsia's financial base and to facilitate the company's expansion plans, including the recent purchase of four Boeing aircraft," the statement said.

AirAsia announced earlier this month it will add 11 Boeing 737-300 aircraft, in line with its regional expansion plans, with seven being leased.

This will bring AirAsia's fleet to 18 aircraft by the end of 2004.

The fleet expansion is needed to serve new destinations, including southern Johor state and Sarawak's oil rich town of Bintulu.

The move will also provide AirAsia the boost it needs to start flying regionally by January 2004.

AirAsia has said it plans to launch flights to Thailand, Indonesia, Philippines and China, and may select smaller airports to keep costs low.

Profitable year

The carrier, which started operations in December 2001, confounded critics when it achieved a profitable first year in which it flew 1.1 million passengers and logged a net income of RM12.03 million.

To date, the airline has carried over 1.8 million passengers.

AirAsia chief executive Tony Fernandes recently said that while airlines were struggling globally and pursuing cost cuts, AirAsia would continue with its route and fleet expansion. - AFP