AirAsia to consolidate regional units as SE Asia expansion plans take off

AirAsia Group CEO Tony Fernandes speaks during a group news conference in Tokyo July 1, 2014. REUTERS/Issei Kato

AirAsia Bhd (AAB) plans to consolidate its various regional affiliates under one holding company, in contrast to a scattered structure now, as the airline takes off on a rapid expansion path in its core Southeast Asian markets.

The Malaysia-based carrier, currently the listed investment holding company and the operating firm for AirAsia‘s Malaysian airline business, proposed a share exchange and transfer of listing with newly created AirAsia Group Bhd, or Newco.

Under the reorganisation, the investment holding function and the Malaysian airline business will be separated. Newco will become the investment holding vehicle and take on AAB’s listing.

AAB will retain the Malaysian airline business and become Newco’s wholly owned unit, the airline said on Tuesday, after earlier reporting record-high quarterly revenues and a plan to expand its fleet by over 20 percent in second half.

“This is a positive step forward as the current corporate structure is awkward. It makes sense to have one holding company that controls all the various airlines and related businesses,” said Corrine Png, CEO at research firm Crucial Perspective.

Co-founder and group CEO, Tony Fernandes, has grown AirAsia from a two-plane operation in 2002 into Asia’s biggest low-cost airline, with affiliates in Indonesia, Thailand, India, Japan and plans to set up ventures in China and Vietnam.

But Fernandes has cited regulatory caps on ownership and complexity surrounding his businesses for not getting the desired valuations from investors.

Following the internal reorganisation, Fernandes said he plans to further streamline the group structure to facilitate future spin-off of operations.

AirAsia is already discussing a sale of its leasing arm and expects to close this before the year-end. Reuters has reported AirAsia was in talks with a South Korean group.

Separately, AirAsia has agreed to partially sell and convert perpetual securities investments in Pt Indonesia AirAsia into new shares in a Pt Rimau Multi Putra Pratama TBK, to support financing needs of its growth in Indonesia via capital markets ahead of a potential IPO.

AirAsia is battling competition from larger groups such as Singapore Airlines and Indonesia’s Lion Air.

For the second quarter ended June, AirAsia reported a 73 percent year-on-year drop in net profit to 92.45 million ringgit ($21.7 million), mainly due to a one-off deferred tax charge that offset the impact of higher passenger numbers and load factor. The profit was the smallest since the end of 2015.

However, revenue hit a record high of 2.38 billion ringgit.

AirAsia said it would add more than 20 planes in the second half of 2017, expanding its fleet that is at 106 now, in one of its fastest expansions in several as travel demand grows.

Also Read:

AirAsia CEO says leasing unit sale to South Korean group ‘imminent’

Malaysia: AirAsia buys 50% in online travel planner Touristly, injects $2.61m

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.