Airline News
AirAsia’s Fernandes “is back”
June 29th 2015
AirAsia chief executive, Tony Fernandes, has told staff and analysts he would spend more time working on the budget airline and put his other business and sporting interests to one side, Read More » after a report by Hong Kong-based GMT Research said AirAsia used “related-party transactions with loss-making associate carriers to boost its earnings”, sending its share price down 24%. AirAsia is the worst-performing airline globally out of mid and large-cap stocks so far this year, its share price down 40%.
Fernandes would now “focus on repairing the financial damage done to Asia's largest low cost airline,” according to analysts and two AirAsia executives who spoke to Reuters on condition of anonymity. Analysts covering the airline said Fernandes told them that he, and his long-term business partner Kamarudin Meranun, would become more hands on. "Tony told us in a conference call last week that he and Kamarudin will take a back seat to everything else and focus on AirAsia," said Mohsin Aziz, a Maybank Investment Bank analyst in Kuala Lumpur. "He's back, and he's getting more involved in many of the decisions," added one executive. According to the Reuters report, Fernandes is now working on the turnaround of the group's money-bleeding Indonesian and Philippine offshoots.
To this end, AirAsia Group last week said it was in final stages of discussions with local partners to raise share capital at its Indonesia AirAsia subsidiary from $13.81 million to $100 million and at its AirAsia Philippines unit from $13.28 million to $100 million. The latter last week announced it would commence service from Iloilo to Xiamen and Seoul from September. Meanwhile, at AirAsia India, majority shareholder Tata Group (30%) is in talks with fellow shareholder Telestra Tradeplace (21%) to increase its equity stake in the start-up. After its first year of operations, and banned from international expansion courtesy of India’s so-called 5/20 rule, AirAsia India has just 1% of the country’s domestic passenger share. As such, the carrier has changed strategy. While initially focusing mainly on smaller, underserved cities in south India, it has now started flying routes from the capital, Delhi. “We realized that we need to be more visible, both to fliers and to policy makers,” said Mittu Chandilya, chief executive of AirAsia India. “Flying to Delhi will simply give more people a chance to experience our product.”
