Thursday, January 04, 2007

AirAsia Flying High After Unit’s Merger Talks

PETALING JAYA: Active trading sent AirAsia Bhd shares soaring to close 11 sen, or 7.28%, higher on total volume of more than 25 million shares on the first trading day of the year.
Investor interest in the counter escalated after the company said an associate would make a major announcement tomorrow.

This follows a recent report that AirAsia was considering an alliance with Britain's easyJet and the Virgin group.

The stock touched a high of RM1.65 in intra-day trading and closed at RM1.62.

Bloomberg yesterday quoted AirAsia chief executive officer (CEO) Datuk Tony Fernandes as saying that Fly Asian Xpress (FAX) would make a statement on Jan 5.

FAX, which is privately owned by Fernandes, AirAsia deputy CEO Datuk Kamaruddin Meranun and former AirAsia chief financial officer Raja Azmi Raja Razali, operates rural air services in Sabah and Sarawak.

OSK Research senior manager Chris Eng said if the budget alliance were to take place, it would likely follow the successful Oasis Hong Kong airline concept.

Oasis is the sole operator of a budget long haul service via its Hong Kong-London flights that started in October.

Eng also said the alliance could possible resort to cross-selling in related industries, such as budget hotels, to improve revenue from various sources.

He said the alliance sounded good and the players involved had proven track records but it was “left to be seen” whether it could translate to improved bottomline.

Eng said Malaysia would benefit should it become a hub for the operations. “It would benefit Malaysia’s economy and boost tourism, especially the budget traveller segment,” he said.
He also said Malaysia was an ideal choice for a hub as its maintenance and cost structure was overall lower than in other parts of the region, including Thailand.

It was reported on New Year’s day that three of the world’s main low-cost airline personalities would team up to start a long haul budget airline company.

The company, to be based in Malaysia, would offer airfares as low as RM100 for flights between China and Malaysia.

The report had quoted sources saying that Fernandes, Sir Richard Branson of the Virgin group and Sir Stelios Haji-loannou of EasyGroup, the parent of easyJet were in discussions to form this alliance for the world’s first low-cost global network, According to sources, the joint venture will first fly between Kuala Lumpur and destinations like Manchester in Britain, Sharjah in the United Arab Emirates and Amritsar in India.

Related Link
Top low-cost Airline bosses to form Global Network

Source : STAR
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