AirAsia X gears up for IPO as a stand-alone airline

0

KUCHING: AirAsia Bhd (AirAsia) is embarking on a corporate and organisational restructuring to provide investors with a clearer and more focused business model.

DIFFERENT MARKET: Fernandes says AirAsia has begun to notice some dilution of its business model and recognise the need for AirAsia and AirAsia X to remain focus on their respective markets.

DIFFERENT MARKET: Fernandes says AirAsia has begun to notice some dilution of its business model and recognise the need for AirAsia and AirAsia X to remain focus on their respective markets.

In its press release yesterday, AirAsia revealed that the airline is moving away from consolidating all businesses into a single investment entity towards having separate public-listed entities that give investors clear choices to invest based on geographic and business models.

Investors may choose to invest in the countries where AirAsia is based currently including Malaysia, Thailand and Indonesia and in the short-haul or long-haul business model.

AirAsia chief executive officer, Datuk Seri Tony Fernandes said, “After more than two years in operation, we have begun to notice some dilution of the AirAsia business model and recognise the need for AirAsia and AirAsia X to remain focused on their respective markets.  Nevertheless, we are extremely pleased with how quickly AirAsia X has grown in the two and a half years since its birth.

“It is a fantastic product and service and we see this reorganisation as symbolic of it coming into its own as it flies into its next growth phase. This arrangement gives AirAsia X financial independence and the latitude to develop its own marketing strategy while it continues to capitalise on the strength of the AirAsia brand, website and culture. This separation gives more focus and discipline to AirAsia X’s model.”

AirAsia X, launched only in November 2007, is now reaching sufficient scale economies to stand on its own instead of relying on services provided by AirAsia.  AirAsia X achieved audited revenues of RM720 million in 2009 and is projected to exceed RM1 billion revenue for 2010 in just its third full year of operations.  It booked a net profit of RM87 million in 2009.  AirAsia X has carried two million guests to date.

AirAsia X is eyeing a public listing in the second half of 2011, subject to market conditions.  It is currently completing a RM100 million rights issue exercise to achieve financial independence and fund its continued growth.  AirAsia is growing its aircraft fleet by 37.5 per cent to 11 aircraft and expanding its route network in Asia, including India, Korea and Japan, by year end.

Organisationally, AirAsia X will take over employment of its own wide-body pilots, cabin crew and ground staff as well as its commercial and marketing team.  This will enable AirAsia X to aggressively pursue its own commercial strategy and better develop capabilities in long-haul services.

The new model will allow both AirAsia and AirAsia X to pursue a clearer and more focused business strategy, attract relevant investor profiles and still achieve the competitive advantage of having common-branded short-haul and long-haul networks strategically feeding each other.

AirAsia will benefit from accessing growth markets in North Asia, Australia, India and Europe that will be fed from AirAsia X’s trunk routes.  On the other hand, AirAsia X will be able to attract guests in these markets with AirAsia’s enticingly unrivalled network of destinations across Southeast Asia.

AirAsia X will continue to use the AirAsia brand and airasia.com website as part of its 30-year brand license agreement with AirAsia.

Following this announcement, AirAsia X is offering free seats to all destinations that AirAsia X flies to. Booking dates are from June 9 to 10 and the travel period will be from October 11 to November 14, 2010. The free seats are available only on airasia.com and mobile.airasia.com.