AirAsia set for slice of Malaysia Airlines

Posted 09/08/2011

Further developments are expected in a landmark share swap between Malaysia Airlines and low-cost carrier Air Asia.

Major shareholders Khazanah Nasional Bhd (MAS) and Tune Air Sdn Bhd (AirAsia) are reported to be closer to announcing a deal which will turn the long-time rivals into partners.

According to sources, Khazanah will acquire a 10% stake in AirAsia from Tune Air, a private group controlled by Tony Fernandes and Kamarudin Meranun.

Tune Air could end up with a 20% stake in the Malaysian national carrier.

Khazanah, which has a controlling stake of 69% in MAS, will continue to remain the single largest shareholder in the national airline.

Under the agreement, AirAsia would get two MAS board seats for the CEO and deputy.

THE MOLE’S View: Malaysia Airlines has moved quickly to shore up its defences ahead of moves by both Singapore Airlines and Qantas to launch low-cost subsidiaries in Asia.

If, as mooted, AirAsia takes over MAS’s domestic operations, and MAS concentrates on long-haul routes, competition between the two - which to date has driven low fares in the region – may be compromised.

Even so, it is a remarkable deal for Tony Fernandes and Air Asia: from upstart budget airline to partner of the national carrier in just a few years is quite a feat and flies in the face of those who once doubted that low cost carriers had any sort of future.


by TravelMole Asia

Originally published 9 Aug 2011 at: http://rss.feedsportal.com/c/398/f/5923/s/173d3433/l/0L0Stravelmole0N0Cstories0C11488810Bphp0Dmpnlog0F1/story01.htm