AirAsia to unify SEA operations under new holding company

Tony-Fernandes_air-asia_600AirAsia CEO Tony Fernandes plans to consolidate the airline’s Southeast Asian businesses under one umbrella.

The ultimate goal is to go public with the new holding company, according to a report in CNBC. But it will take some time, as there are several hurdles to cross.

AirAsia has units in Malaysia, Indonesia, the Philippines and Thailand. It also has units in several non-Southeast Asian countries.

The budget airline plans to park its business in Malaysia under one umbrella, according to the report. Fernandes wants to take it one step at a time, starting with the consolidation.

Fernandes told CNBC: “We’re in a fantastic position. Growth factors are very high at the moment … Business is good and we’re going to take 29 planes this year, which is a record number of planes for us.”

AirAsia has more than 400 planes on its order book.

“We now have Indonesia and the Philippines kicking some great doors for us, and India is doing surprisingly much better than we anticipated — so early,” Fernandes was quoted as saying.

The report said conditions in the oil and currency markets were also helping to boost the business.

Fernandes said oil prices were in the “best position” they had ever been, although they were not the lowest ever. He expects it to stay that way.

Oil was priced at US$52.60 a barrel on Monday.

Fernandes also said AirAsia was benefitting from the weak Malaysian currency as it had boosted the country’s inbound tourism.

“In some ways, we benefited from the ringgit devaluation as well, though the cost side went up. I think Malaysia became a much cheaper country to come to,” he said.

The key challenge to becoming a publicly-listed holding company, however, is getting the various nations to agree to this.

AirAsia must first negotiate with the governments to completely own each of its airlines “by swapping partners’ stakes into shares in the main holding company,” CNBC quoted a CIMB Research report as saying.

If those negotiations fall through, an AirAsia group initial public offering may not be in the cards anytime soon.

Fernandes was quoted as saying: “Let’s get that consolidation done. Let’s get the benefits of operating as one company together, to get cost out. And three, if we can persuade the governments to allow us to do that, then we do [a public listing],” he said.