Most AirAsia shares in foreign hands

16 January 2010

PETALING JAYA: The majority of AirAsia Bhd shares are in the hands of foreigners while the bulk of shares in its rival Malaysia Airlines (MAS) are held by local institutions.

AirAsia announced to Bursa Malaysia yesterday that 50.36% of its issued and paid-up share capital was held by foreigners as at end-2009, compared with 37.98% foreign shareholding in June. It did not name the foreign shareholders.

AirAsia told the exchange that foreign ownership of shares in the company had exceeded the limit of 45% of its total issued and paid-up share capital.

The airline, however, did not say how it would regularise the shareholding but an analyst contacted by StarBizWeek said AirAsia would have to take steps to regularise it but it had some time to do so.

“It (the share transaction) is market driven as those who bought the shares must have believed that the travel sector was seeing signs of improvement for them to buy into AirAsia,” said the analyst.

The airline said the shares held by foreigners within the prescribed limit shall be entitled to all rights and entitlements attached to the shares. Shares held by foreigners which have exceeded the prescribed limit shall also be entitled to all such rights and entitlements except for the exercise of voting rights in respect of the shares.

Meanwhile, the Employees Provident Fund (EPF) had over the past month also been picking up some more shares in MAS. Its shareholding in the national carrier increased marginally from 12.57% as at April 20, 2009 to 13.59% as at end December. Accordingly, local institutions now hold 90.4% stake in MAS. EPF also had a 8.91% direct stake in AirAsia as at end of last year.

As at April 20, 2009, MAS was 52% owned by Penerbangan Malaysia Bhd, Khazanah Nasional Bhd has 14.33%, EPF 12.57%, Skim Amanah Saham Bumiputera 5.34%, State Financial Secretary Sarawak 2.71% and Warisan Harta Sabah Sdn Bhd 2.4%.

MAS was down 0.3 sen to RM2.96 while AirAsia shed 0.2 sen to RM1.41 yesterday.

By B.K.Sidhu

The Star

AirAsia Celebrates Inaugural Flight To Kota Kinabalu From Taipei

15 January 2010

KUALA LUMPUR -- Low-cost airline, AirAsia, on Friday celebrated its maiden flight to Kota Kinabalu (KK) from Taipei.

In a statement here on Friday, AirAsia said the new international destination would establish KK as its second largest hub in Malaysia with a total of seven international and nine domestic destinations.

"The route, which was opened for booking in November 2009, received excellent response. Over 32,000 seats were sold to date," it said.

Chairman of AirAsia, Datuk Aziz Bakar, said besides Taipei, KK would also connect guests to Brunei, Jakarta, Shenzhen, Macau, Clark and Singapore.

"To date, we have carried 129,000 guests both inbound and outbound from Taipei since April 2009 and the numbers are still growing," he said.

-- BERNAMA

Fernandes could complete Hammers takeover on Friday

14 January 2010

The takeover of West Ham United is on schedule to be completed on Friday, and Gianfranco Zola will immediately be handed an injection of substantial funds to buy his way out of relegation trouble.

GettyImages

Tony Fernandes: Air Asia boss a West Ham fan.

ESPN Soccernet has been told that the five lending banks have all agreed to hand over control of the crisis torn East End club in time for Zola to embark on a spending spree before the January transfer window closes.

It should be completed in the next 24 hours and, as ESPN Soccernet reported on Wednesday, Tony Fernandes is in pole position, but is being hotly pursued by former Birmingham City owners David Gold and David Sullivan, with Massimo Cellino, a property developer based in Miami, making a late bid.

Fernandes, the boss of Team Lotus - the returning Formula One outfit - and founder of Air Asia, has already outlined his plans in detail, and has made a very impressive pitch.

Debts have spiralled out of control since the collapse of Landsbanki, the Icelandic bank in which Bjorgolfur Gudmundsson, the former owner of West Ham, held a 41% stake. Although CB Holdings' £100 million asking price has never been met, the equity investment proposed values West ham at around that amount.

Without the takeover going through the Hammers would be hard pressed to stave off relegation, and ultimately will have to face the unsavory act of selling off their best players like Scott Parker and Matthew Upson.

ESPN Soccernet's source comments: "Every day counts if the funds are to be made available to the manager, everyone is acutely aware that time is running out, so minds are focused on trying to tie up a deal as soon as possible. It wouldn't surprise me it if went through on Friday."

The feeling among the lending banks is that Fernandez will be the better long-term investor. With payments spread over a period of time with the capital going into the club to alleviate debts of £75 million, that is of paramount importance.

As for the late intervention of Cellino, that has put the cat among the pigeons, but not without its problems, as he is already an owner of another club - Cagliari - which would cause problems with UEFA. And of course, the Premier League are tightening up their status exploration of any new owners and the source of their funds to buy a club.

Rothschild, the investment bank appointed by CB Holdings to handle the sale, is sure to play a prominent role in scrutinising the source of funds, which has also caused Canary Wharf based InterMarket to fall down the list of potential purchasers.

Cellino has been reported in the press as saying that he is acting as a frontman for an unidentified consortium, but ESPN Soccernet has been told that he has so far suggested he would be a potential purchaser in his own right.

The 54-year-old's fortune is apparently accrued from running his family's commercial farming and property business, before taking control of Cagliari in 1992. He convinced Zola to return to his homeland club after his hugely successful spell with Chelsea.

He moved to Miami three years ago, but remains an active president of the club, attending the majority of their matches. He also serves as vice-president of the Italian League and has maintained close links with Zola and Gianluca Nani, the Italian who is West Ham's technical director, so his connections with Cagliari would need to further scrutinised before he could even be considered a viable alternative bidder.

Cellino is a successful owner at Cagliari, providing the finance for the club's new training ground and sports complex in Assemini and recently announcing plans for a new stadium, the Karalis Arena, which he hopes will form part of Italy's candidacy to host Euro 2016.

Intermarket, the London-based investment company, registered an interest, but City sources have always been sceptical about the source of their funding, while the proposed takeover suffered a setback last weekend with the death of Jim Bowe, the company's chief executive.

By Harry Harris, Football Correspondent

Soccernet.espn.go.com

Air Asia boss in Hammers takeover bid

13 January 2010

Malaysian businessman Tony Fernandes is out to win control of West Ham in the next 48 hours by pledging a "significant" transfer pot for Gianfranco Zola to invest in a new team at Upton Park.

GettyImages

Tony Fernandes: Air Asia boss a West Ham fan.

Hammers fan Fernandes is trying to hurry the deal through in time to make an impact in the January transfer window.

However, former Birmingham City owners David Gold and David Sullivan are also in the bidding war with Fernandes, and haven't given up hope of success.

Gold and Sullivan have the experience of running Blues and would probably want the equally knowledgeable Karren Brady - who was managing director at St Andrew's - as part of their new management team at Upton Park. In contrast, the man who owns Air Asia has no previous involvement in football, but would maintain the high level of foreign ownership in the Premier League.

ESPN Soccernet has learned that the long-awaited Hammers takeover is in its final stages, and could be concluded before the weekend to provide an injection of much needed transfer cash for Zola, with the new owners likely to be in place, ready for action on Monday morning.

A City source told ESPN Soccernet: "The way the transaction is being structured any capital is going straight into the club.

"The plan is for a new share issue and this can mean a significant investment going into the club, which in turn can stimulate the belief from the banks that over a period of time, they can recoup the money owed to them.

"The feeling is that Tony Fernandes really does mean business and West Ham can end up with more capital if they go with him."

The source insists that Intermarket - another company heavily linked with a takeover bid for the Hammers - has never been able to show proof of funds to the satisfaction of the banks, despite its protestations to the contrary.

The consortium of five banks that has loaned money to the Hammers is believed to favour the takeover proposals tabled by Fernandes, but Gold and Sullivan might make a last ditch attempt to improve their offer in the next 24 hours.

Rothschild, the investment bank which was appointed in October to sound out potential investors, together with representatives from Glitnir, Standard Bank, Lloyds, Royal Bank of Scotland and Straumur, West Ham's five main lenders, is on the verge of making its decision.

Fernandes, a lifelong West Ham supporter and Lotus F1 team boss, has been locked in talks in with Straumur, in its capacity as the largest shareholder in CB Holdings - the company set up by the creditors of West Ham's former owner Bjorgolfur Gudmundsson.

By Harry Harris, Football Correspondent

Soccernet.espn.go.com

Looking for better terms in AirAsia-Jetstar alliance

08 January 2010

KUCHING: Cross-border alliance between both low cost carriers (LCCs), AirAsia Bhd (AirAsia) and Jetstar Airways Pty Ltd (Jetstar) could negotiate better terms on passenger and cargo handling services at airports that they both fly to which are over a dozen locations across Asia.

LOWER COSTS: Photo shows Fernandes. Maybank Investment Bank in its research report cited that a five per cent reduction in such charges would lower AirAsia’s total costs by less than one per cent.

Maybank Investment Bank (Maybank) in its research report cited that a five per cent reduction in such charges would lower AirAsia’s total costs by less than one per cent.

Similarly, pooling inventories can generate savings, although this is also limited given the less than five years old aircraft both carriers used.

Jetstar chief executive Bruce Buchanan was quoted by various media as saying that savings for each of two airlines would be “hundreds of millions of dollars”. However, given that AirAsia’s aircraft order stretches into 2014, any savings from the joint procurement for future aircraft purchases will be realised only later in the future.

Maybank however left its 2010-2011 forecast for AirAsia unchanged at this point pending future developments.

As announced on Bursa Malaysia recently, both parties are still in discussions to investigate the desirability and feasibility of forming a possible collaboration to find innovative ways to reduce costs, pool expertise and drive efficiency to ultimately bring about cheaper fares for both carriers.

The discussions are still at a preliminary stage and yet to enter into any binding agreements.

According to OSK Research Sdn Bhd (OSK Research) in its research report, the cost savings are already phenomenal in the airlines’ daily operations, the potential cost-cutting collaboration is definitely welcome as any positive cost reduction may alter their bottomlines.

Further, OSK Research was unable to determine the actual quantum of cost savings that AirAsia may enjoy due to the lack of details but suspected that part of the cost reduction may eventually be passed on to passengers in order to enhance competitiveness of the Low Cost Carriers (LCC).

Apart from that, it may take a while for both airlines to come to an agreement on their respective shares of the potential savings derived from this initiative.

Meanwhile, both carriers have dismissed concerns of potential job cuts on both sides, thanks to the aggressive growth of the LCCs in keeping their employees’ head growing, added OSK Research.

Also the cooperative arrangements for the provision of passengers and ground handling arrangements in Australia and within Asia at overlapping airports would generate a cost savings curve at approximately RM2 million per annum based on every ringgit saving from each passengers.

The non-equity alliance between both parties would not generate any impact on financials at the moment as both airlines still have many undelivered aircrafts. OSK Research said the earliest implication may be five years from now.

The point of sharing aircraft parts plus pooling and joint procurement with focus on engineering or maintenance supplies will be a good move as well. It may potentially improve bargaining power as both carriers operate similar range of narrow body aircrafts made by Airbus.

On the other hand, the potential staff cost saving moves on reduction in ground handling workforce will be difficult to quantify the changes at this moment.

The research house also remained mindful of the fact that high crude oil prices may squeeze AirAsia’s margins, especially given that price changes may persist in the short to medium term.

Nevertheless, 2010-11 prospects appear challenging without deferred tax credits that contributed RM80 million in first quarter last year and higher fuel costs that have more than doubled year-on-year in first quarter on this year year-to-date basis leaving the RM1.35 target price unchanged based on 7.5 times this year per earnings ratio, Maybank pointed out.

OSK Research, however, remained mindful of the fact that the budget carrier might go weaker than expected in the last third quarter results. It recommended a 12 months target price of RM1.13. The fair value was derived from 10 times FY10 earnings per share.

Borneo Post

Budget carriers’ jousting may not benefit travellers yet

08 January 2010

AirAsia and Jetstar have formed a non-equity partnership. — Reuters pic

Since then, the carrier has been hit by an avalanche of negative press, much of which has come out of Australia, where archrival Jetstar is based.

Turning the tables, Tiger announced earlier this week that it had received financial backing from a European institution to buy two new aircraft.

But the biggest news by far in the budget airline jousting came on Wednesday.

Qantas’ chief executive Alan Joyce, flanked by Jetstar’s boss Bruce Buchanan and the flamboyant head of AirAsia Datuk Seri Tony Fernandes, unveiled what they hailed as a world first — an alliance between two low-cost airlines.

To slash costs and drive efficiencies, AirAsia and Qantas-controlled Jetstar have agreed to pool resources and expertise in several areas.

These include buying aircraft, ground-handling and maintenance, as well as stockpiling aircraft components and spare parts. The deal is expected to shave hundreds of millions of dollars off annual operating costs.

Clearly, the dogfight for supreme control of the fast-growing low-cost travel segment is intensifying.

The stakes are high. Asia is set to become the world’s largest aviation market in the next 10 to 15 years, outstripping those of the United States and Europe.

But what does it all mean for the traveller? Will fares come down? Will it be easier to book air tickets? Will there be more routes and flights?

On the surface, the possibilities that come with two major players ganging up are mind-boggling. The Sydney-based aviation think-tank, the Centre for Asia Pacific Aviation, calls the alliance a “formidable low-cost combination”.

Together, AirAsia, which has subsidiaries in Indonesia and Thailand, and Jetstar, which is associated with Singapore-based Jetstar Asia and Jetstar Pacific in Vietnam, have 142 aircraft flying and another 165 on order.

To put that in context, Singapore Airlines has 108 planes in the air and 60 on firm order, according to information on its website. This does not include Tiger aircraft.

For its part, Tiger, which also owns a domestic carrier in Australia, has 17 aircraft in its total fleet, with another 51 due for delivery by 2015.

With Jetstar’s strong presence in Australia, and AirAsia’s wide regional reach, the two carriers could develop a single booking platform for travellers transferring between their two airlines.

Code-sharing, where a flight operated by one airline is offered as a service by other airlines, is also a possibility that could open up more flights and routes to consumers.

As for Tiger Airways’ planned listing, a successful initial public offering would give the airline the funds it needs to buy and/or lease more aircraft, launch new routes and bump up flight numbers — all good news for the traveller.

What could happen in theory, though, may not translate into reality.

Fares, for example, are not going to tumble just because Jetstar and AirAsia have joined hands. While the hope is that savings derived from the alliance would be passed on to the consumer by way of lower fares, fuel remains the No 1 cost for any airline and if prices keep rising, total operational costs will increase.

The average cost of jet fuel this week is about US$88 (RM299) a barrel, 3.7 per cent higher than that a week ago, and more than 50 per cent higher compared with the rate this time last year.

As for the grand plans that Jetstar and AirAsia have announced to join forces, it seems little more than a gentleman’s handshake for now. Neither side has unveiled any concrete plans, details or timeframe.

Both carriers can also be sure that attempts to cement their relationship operationally would be subject to close scrutiny by national watchdogs that exist to weed out anti-competitive practices and ensure a level playing field for all parties.

As for route expansion and development of new markets, airlines are still subject to regulatory constraints, and while the pace of liberalisation has picked up in recent years, Asia still has a long way to go before free skies become a reality.

So, while low-cost carriers are grabbing the headlines these days, travellers are unlikely to reap any significant benefits in the short term from these recent eye-catching developments.

Still, the Jetstar/AirAsia partnership is a clear and positive sign that both carriers are very much focused on trimming costs and maintaining lean operations. The tie-up and the rivalry with Tiger Airways also promote healthy competition in the industry. In the end, this can only be good for consumers.

The Straits Times

Jetstar tie-up a positive development for AirAsia

08 January 2010

But investors, analysts cautious due to lack of details on coalition

PETALING JAYA: News of the newly forged alliance between AirAsia Bhd and Jetstar Airways Pty Ltd is seen as a positive development for AirAsia, but investors and analysts remain cautious on the budget airline due to a lack of details on the coalition as well as lingering worries about the aviation industry.

“Our main concern remains fuel cost,” Kenanga Research said yesterday. “We are unsure if the alliance would help both airlines in reducing their fuel cost via bulk purchasing or hedges.”

On Wednesday, the two budget airlines made their partnership official after almost a year of speculations about a possible tie-up between them.

Jetstar is the budget airline unit of Australia’s Qantas Airways Ltd, while AirAsia is Asia’s most successful low-cost carrier.

One of Jetstar’s Boeing 717s. Kenanga Research says it is unsure if the alliance will help both airlines in reducing their fuel cost via bulk purchasing or hedges — AP

In a statement to Bursa Malaysia yesterday, AirAsia said the two parties were in “discussions to investigate a possible collaboration” to reduce cost, pool expertise and to drive efficiencies to ultimately result in cheaper fares.

“We view the AirAsia-Jetstar move as beneficial to both airlines because successful cost reduction efforts will boost their bottomlines and help them compete more effectively against high-cost competitors,” CIMB Research said yesterday.

But the research house kept its forecast unchanged for AirAsia at this juncture as “it is too early to assess how much savings AirAsia can derive and how long it will take to extract them.”

CIMB noted that the two airlines operated a significant fleet of Airbus A320 aircraft, with slightly over 100 planes between them, and that they could work together in parts procurement, maintenance contract negotiation and sharing of inventories.

“These procurement savings form the bulk of the potential benefits of the AirAsia-Jetstar cooperation,” it said. Kenanga has predicted, based on figures quoted in the press, that cost savings from the pooling of resources in maintenance alone could be around RM110mil a year.

The two airline chiefs had said on Wednesday that the alliance could lead to as much as A$300mil in annual savings.

Meanwhile, RHB Research Institute has ruled out the possibility that the tie-up would be a prelude to a merger between the two airlines.

“We believe countries in the region are still not ready for cross-border merger and acquisition between airlines due to various highly entrenched strategic, tactical and national security consideration,” it said.

RHB Research also left its forecast unchanged with the latest development.

“Our forecast has already reflected AirAsia’s continued efforts to contain and cut cost. Moreover, AirAsia had said that it intends to pass down some of the cost savings to consumers in the form of cheaper fares,” it said.

AirAsia climbed 1 sen, or 0.7%, yesterday to RM1.43 on a volume of 6.3 million shares.

The benchmark FTSE Bursa Malaysia KL Composite Index eased 0.14% to 1,291 points.

By Izwan Idris

The Star

AirAsia Offers Extra Flights For Chinese New Year

07 January 2010

KUALA LUMPUR -- Low cost carrier AirAsia Bhd is offering extra flights to various destinations to meet additional travel demands during the forthcoming Chinese New Year holidays.

In a statement here Thursday, the company said these extra flights will be from Feb 9 to 21, and will cater to popular routes including Kuala Lumpur-Penang, Kuala Lumpur-Singapore, Kuala Lumpur-Sibu, Kuala Lumpur-Kuching, Kuching-Sibu, Singapore-Kuching, Kuala Lumpur-Johor Bahru and Johor Bahru-Sibu.

Its regional head of commercial, Kathleen Tan, said this year's Lunar New Year, the year of Tiger, also happened to fall on Valentine's Day so couples would have another excuse to hop on the plane and go on their romantic escapade with low fares.

These extra flights are therefore due to the anticipated high load and strong demand during the festive period, she added.

To add value, AirAsia, under GoHoliday at http://goholiday.airasia.com, has also lined up some great online hotel deals to stretch the dollar where they may choose their holiday lodgings from over 50,000 hotels.

--BERNAMA