AirAsia wants out

END OF COLLABORATION?: Low-cost carrier will seek to terminate all joint-venture agreements with Malaysia Airlines, says source

Low-cost carrier AirAsia Bhd wants to opt out of all joint-venture agreements with national carrier Malaysia Airlines (MAS), a source says.

AirAsia decided at a board meeting last week that it would seek to terminate its agreements with MAS soon, according to the source.

AirAsia group chief executive officer (CEO) Tan Sri Tony Fernandes said no comment when queried about the matter through text messages, while calls and text messages to AirAsia Malaysia
CEO Aireen Omar went unanswered.

MAS chief executive officer Ahmad Jauhari Yahya did not respond to a text message to him.

A termination of the memorandum of understandings (MOUs) between AirAsia Bhd and MAS would effectively wipe out the remnants of a deal between Khazanah Nasional Bhd and Tune Air Sdn Bhd that had gone awry.

In August 2011, Khazanah and Tune Air signed a deal to swap part of its holdings in MAS and AirAsia respectively, in a move to facilitate a collaboration between the two carriers.

In May 2 however, the deal was cancelled following an uproar by MAS employees.

A supplemental agreement between AirAsia and MAS instead took its place as part of a move to salvage its initial collaboration plans.

Two MOUs were signed on May 2 2012 whereby one was to focus on the setting-up of a joint venture company to provide aircraft component maintenance support and repair services.

Another was for the establishment of a special purpose vehicle by MAS, AirAsia and AirAsia X to improve value for money and to increase competitiveness through procurement synergies.

An analyst, who declined to be named, said the news of a possible cancellation of the joint ventures between MAS and AirAsia is not surprising.

He said MAS employees are reluctant to cooperate with AirAsia, so it would have been difficult for them to work together.

"The JVs would have benefited them both though," said the analyst.

The agreements between AirAsia and Malaysia allow for a termination by mutual agreement anytime within a six-month period from the date of the signing.

Such a termination however, will not release a lock up period of six months that disallows both parties from talking to, negotiating or cooperating with any other parties.

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