AirAsia and rival MAS confirm tie-up

Major shareholders in national carrier Malaysia Airlines and budget airline AirAsia will engage in a share swap as part of a 'Comprehensive Collaboration Framework' to synergise operations between the two competitors.

Under the deal, Tune Air Sdn Bhd, as the largest shareholder in AirAsia, will take on 20.5 percent of shares in MAS, while Kazanah Nasional Berhad likewise will acquire 10 percent of shares in AirAsia.

Khazanah is also considering getting a 10 percent stake in AirAsia X, which is AirAsia's unlisted long-haul arm, pending terms and price offered.

Implementation of the collaboration framework however is pending completion of a full anti-trust review by MAS, AirAsia and AirAsia X.

Once in effect, the collaboration agreement will remain in place for five years, with an option for renewal for another five years.

The deal also gives Malaysia-based AirAsia CEO Tony Fernandes - who took over the no-frills carrier and turned into one of the industry's biggest success stories - a voice in turning around loss-making Malaysia Airlines.

A coup for Fernandes

The arrangement marks a coup for the brash Fernandes.

A separate statement by Malaysia Airlines said a four-person committee including Fernandes would take over management of the national carrier.

As part of that arrangement, Malaysia Airlines managing director Azmil Zahruddin Raja Abdul Aziz will resign to make way for the new leadership, the statement said.

Before the announcement analysts had said the tie-up would be also be welcome news for struggling Malaysia Airlines.

Fernandes has been rapidly expanding AirAsia's route system and undercutting Malaysia Airlines with its bargain air fares on routes in which they compete.

Sources close to the deal have said it would allow the carriers to work together to cut rising costs by sharing maintenance and affect bulk purchases of parts and aircraft.

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