No Merger For AirAsia Group

News

AWIN First Jun 10 , 2010
Neelam Mathews mathews.neelam@gmail.com
NEW DELHI

Air Asia Group says it will not merge all of its entities, putting speculation to rest after it announced a restructuring earlier this week.

There is, instead, a move away from consolidating all businesses into a single investment entity toward having separate publicly listed entities that give investors clear choices to invest based on geographic zones, says Air Asia.

The group is looking at a more focused business model even as its long-haul arm AirAsiaX launched in November 2007, reaches sufficient economies of scale to stand on its own.

AirAsiaX will now take over employment of its own widebody pilots, cabin crew and ground staff, as well as its commercial and marketing team. It says this will enable it to aggressively pursue its own commercial strategy and better develop capabilities in long-haul services.

AirAsia X CEO Azran Osman-Rani, on a recent visit to New Delhi, had told AviationWeek there were no definite plans for the merger. “At the moment, shareholders don’t have specific plans to execute the merger.”

Azran added that there are no material differences operationally as the carrier was taking advantage of synergies. “Our organizational team is focused to execute [our goals] in a targeted manner.”

Tony Fernandes, CEO of the group, said in annoncing the changes this week that “after more than two years of operation, we have begun to notice some dilution of the AirAsia business model and recognize the need for AirAsia and AirAsia X to remain focussed on their respective markets.”

Both will still achieve the competitive advantage of having common-branded, short-haul and long-haul networks strategically feeding each other. Fernandes told AviationWeek in March: “I am the glue that sticks them [AirAsia and AirAsiaX] together.