Malaysia Airlines forms an alliance with AirAsia
Source: Agencies |
August 10, 2011, Wednesday
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Print Edition
Print Edition
BUDGET carrier AirAsia and state-owned Malaysia Airlines formed an alliance yesterday through a share swap deal to end their long rivalry and boost business.
Tune Air, the parent of AirAsia, and government investment arm Khazanah signed an agreement to exchange shares. This will see Tune hold a 20.5 percent stake in Malaysia Airlines, while Khazanah gets a 10 percent stake in AirAsia.
Under the deal, Malaysia Airlines will focus on the premium market and cede low-cost routes to AirAsia. Analysts say it will help turn around the struggling state carrier and improve AirAsia's access to lucrative international routes.
However, some opposition lawmakers fear it will create a monopoly.
AirAsia Chief Executive Tony Fernandes defended the deal, saying it would allow both carriers to focus on growth and improve their services.
"I don't think there is anything to worry about for the Malaysian public," he said.
"We want to compete with the big players of the world and have a slice of the huge market," Fernandes said.
After the deal, Khazanah will still remain the key shareholder in Malaysia Airlines with a 49 percent stake.
HwangDBS Vickers Research said the deal would help reposition Malaysia Airlines as a premier long-haul carrier. The flag carrier plunged into the red in the first quarter amid high fuel prices.
For AirAsia, it can expect to get more access to international routes with Khazanah as its shareholder. AirAsia has long complained that the state carrier monopolizes profitable routes.
Malaysia Airlines Chairman Md Nor Yusof said the agreement marked "a new era of cooperation," with both airlines complementing each other and bolstering Malaysia's ambition of becoming a regional travel hub.
Tune Air, the parent of AirAsia, and government investment arm Khazanah signed an agreement to exchange shares. This will see Tune hold a 20.5 percent stake in Malaysia Airlines, while Khazanah gets a 10 percent stake in AirAsia.
Under the deal, Malaysia Airlines will focus on the premium market and cede low-cost routes to AirAsia. Analysts say it will help turn around the struggling state carrier and improve AirAsia's access to lucrative international routes.
However, some opposition lawmakers fear it will create a monopoly.
AirAsia Chief Executive Tony Fernandes defended the deal, saying it would allow both carriers to focus on growth and improve their services.
"I don't think there is anything to worry about for the Malaysian public," he said.
"We want to compete with the big players of the world and have a slice of the huge market," Fernandes said.
After the deal, Khazanah will still remain the key shareholder in Malaysia Airlines with a 49 percent stake.
HwangDBS Vickers Research said the deal would help reposition Malaysia Airlines as a premier long-haul carrier. The flag carrier plunged into the red in the first quarter amid high fuel prices.
For AirAsia, it can expect to get more access to international routes with Khazanah as its shareholder. AirAsia has long complained that the state carrier monopolizes profitable routes.
Malaysia Airlines Chairman Md Nor Yusof said the agreement marked "a new era of cooperation," with both airlines complementing each other and bolstering Malaysia's ambition of becoming a regional travel hub.
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