AirAsia-MAS deal: It's more about growth, not cutting back

KUALA LUMPUR: The deal struck between AirAsia Bhd and Khazanah Nasional Bhd will not see AirAsia or Malaysia Airlines cut back on neither routes nor plane orders.


AirAsia recently made an order for another 200 aircraft while MAS recently added another 10 aircraft to its ongoing fleet renewal programme.

Its order of six A380s is also part of MAS' fleet renewal programme.

Yesterday, Khazanah officially agreed to swap a 20.5 per cent stake in MAS for a 10 per cent stake in AirAsia's majority shareholder, Tune Air Sdn Bhd.

This brings the investment arm's stake in the national carrier down to 49 per cent. The government also retains its golden share in MAS.

"One party does not gain at the expense of the other. This is very clearly spelt out in the collaboration agreement," MAS executive director Mohammed Rashdan Mohd Yusof said during a press conference to announce the details of the Comprehensive Collaborative Framework, as it is known.

The collaboration agreement will remain in effect for a period of five years with an option for a further five-year renewal.

While the deal has identified potential collaborative opportunities in areas of aircraft purchasing, engineering, ground support services, cargo services, catering and training, detailed terms of the collaboration will follow after the completion of a full anti-trust review by AirAsia, MAS and AirAsia X.

"There's no need for AirAsia and MAS to cut back on any routes. There are five-star hotels and there are three-star hotels, this is not about rationalisation and cutting back. This is about growth," AirAsia co-founder and group chief executive officer Tan Sri Tony Fernandes said.

Khazanah chief executive officer Tan Sri Azman Mokhtar went on to add that the two airlines remain distinct and separate.

"There were many ways to structure this, particularly for aviation, but we structured this in such a way that the two airlines remain distinct and separate. Separate brands, separate business models, separate governance, separate boards, separate cultures even, and the idea is to focus on the core competencies," he said.

An announcement made to Bursa Malaysia Bhd yesterday pegged the exercise price for MAS and AirAsia warrants at RM2 and RM4.94 respectively, a 25 per cent premium to the closing prices of the two stocks on August 5.

Under the deal MAS shareholders will receive one free AirAsia warrant for every 30 shares held, while AirAsia shareholders will receive one free MAS warrant for every 10 shares held.

The warrants have an exercise period of 2.5 years.

Khazanah Nasional also proposes to acquire a 10 per cent stake in AirAsia X.