Monday, August 8, 2011

AirAsia to rescue MAS? Announcement on Aug 9?

Posted by- Neelam Mathews
August 8, 2011

Malaysian -AirAsia may soon create another chapter in its history as it looks set to form a working partnership for a share swap with Malaysian Airlines (MAS), say news reports.

AirAsia Group CEO Tony Fernandes is expected to ink the deal this week.

 “Both companies can cooperate on which routes to operate in order to enhance operating costs,” Transport Minister Kong Cho Ha said.

Kong said the venture would eliminate issues concerning both airlines fighting for rights to operate desired routes. With the deal, the issue of both airlines competing for new routes would not arise.

MAS has declined to comment. Its chairman left the company last month as it restructures its top team in a bid to return to profitability.

AirAsia's main shareholders Tune Air, owned by Fernandes and Kamarudin Meranun, is expected to benefit most from the share swap with MAS as it hold 26.28 percent of the budget carrier as of July 6 this year.

The budget carrier's market capitalisation of RM11 billion (S$4.46 million) is now two times more than MAS which stands at RM5.3 billion, a decade after Tune Air took over the two-plane operation.

"This is a deal that has taken such a long time to get done but the current situation benefits Fernandes as MAS is in a bad shape," an official was quoted saying, adding that the MAS's main shareholder Khazanah Nasional Berhad and AirAsia boss had negotiated five  times previously.

The share swap could raise the ire of the MAS unions which have been working with limited pay rises under the airlines' Five Star Value Carrier or Business Transformation Plan 2 but only to see a new shareholder come in to rescue the company again.

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