Budget carrier AirAsia and state-owned Malaysia Airlines have dumped a share swap deal that was always destined to end in tears.
Analysts, quoted by the Jakarta Globe, said the move wasn’t a surprise because of pressure on the government from Malaysia Airlines’ 15,000-strong workers’ union ahead of general elections widely expected in the next few months.
The union feared the tie-up would prompt a restructuring plan with job and salary cuts to help the loss-making carrier return to the black. Ԭլ
Under the pact reached last August to end their rivalry and boost business, Tune Air, the parent of AirAsia, got a 20.5% stake in Malaysia Airlines.
In return, government investment arm Khazanah got a 10% stake in AirAsia. Ԭլ
Khazanah said the "cross-holding of shares has become a distraction to management’s efforts to turn around" the flag carrier.
The two airlines said in statements to the stock exchange in Kuala Lumpur that plans for Malaysia Airlines to focus on the premium market and AirAsia on low-cost routes "shall cease to be operative" following the move. Ԭլ
AirAsia CEO Tony Fernandes and his deputy Kamarudin Meranun have resigned from Malaysia Airlines’ board.
Analysts said abandoning the pact doesn’t make much a lot of difference to AirAsia but clouds Malaysia Airlines’ future.
Ԭլ"The issue is how will Malaysia Airlines fix itself. It is facing turbulent times amid an environment of high jet fuel prices and intensifying competition," said Ahmad Maghfur Usman, an analyst with OSK Research.
ԬլMalaysia Airlines said it would make an announcement soon on plans to raise funds for new planes to be acquired this year, including five superjumbo A380 aircraft.լ
