Critical time for AirAsiaX and AirAsia
KUALA LUMPUR – A merger between AirAsia X and AirAsia Bhd makes business sense and the combined balance sheet would make sourcing for future funding much easier, said AirAsia X chief executive officer Azran Osman-Rani.
“It would be difficult for AirAsia in the future if it did not have trunk routes as (this) is where the traffic volumes come from, so AirAsia needs growth from AirAsia X and the merger allows it to tap growth opportunities in the long-haul markets,†Azran told Malaysia’s Star newspaper.
“AirAsia cannot continue to just criss-cross and enter new markets, it needs a bigger base,’’ he added.
Given the nature of the business, which is counter-cyclical, a large base was necessary to balance the routes in peak and non-peak months, he said.
“That is why AirAsia X has to sell beyond Kuala Lumpur or else only 20 percent of the seats will be taken up. It has to sell destinations, be it in Malaysia or the region, and 80 percent of those travelling with AirAsia X use AirAsia to travel to Langkawi, Penang, Phuket or even Bali.
“That is why AirAsia needs growth from AirAsia X and for that greater control of AirAsia X is needed,’’ Azran said.
Recently, AirAsia group chief executive officer Tony Fernandes was reported as saying his personal preference was for a merger of the two companies.
AirAsia has a 16 percent stake in AirAsia X and an option to increase it to 30 percent.
The remaining shareholders in AirAsia X are Aero Ventures Sdn Bhd (48 percent), the Virgin Group (16 percent), while Bahrain-based Manara Consortium and Japan-based Orix Corp hold the
Even though it is still at the idea stage, critics are already saying the merger is necessary to rescue AirAsia X as, to them, AirAsia is now subsidising AirAsia X.
“Rubbish, we can clearly dispute that. We are in a very good position and on a much firmer footing and now is an interesting time to talk about merger,’’ Azran said.
Ian Jarrett
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