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AirAsia and Malaysian Airlines agree a share swap deal | AirAsia and Malaysian Airlines agree a share swap deal |
(40 minutes later) | |
AirAsia and its rival Malaysian Airline System (MAS) have agreed a deal to swap shares in a bid to boost growth. | AirAsia and its rival Malaysian Airline System (MAS) have agreed a deal to swap shares in a bid to boost growth. |
Tune Air, the parent company of AirAsia, will exchange 10% of AirAsia shares for 20.5% of MAS stocks with the state-owned firm Khazanah Nasional. | Tune Air, the parent company of AirAsia, will exchange 10% of AirAsia shares for 20.5% of MAS stocks with the state-owned firm Khazanah Nasional. |
The two carriers said they will co-operate in areas such as purchasing planes and opening new routes. | The two carriers said they will co-operate in areas such as purchasing planes and opening new routes. |
MAS will also convert its low-cost FireFly brand to a full-service airline to avoid competition with AirAsia. | MAS will also convert its low-cost FireFly brand to a full-service airline to avoid competition with AirAsia. |
"Why do we do this? I think it will help us make a lot of money," said Tony Fernandes, the chief executive of AirAsia. | "Why do we do this? I think it will help us make a lot of money," said Tony Fernandes, the chief executive of AirAsia. |
Mutual benefit? | |
The two carriers have been competing against each other for past decade. However, their fortunes have taken completely different paths. | |
While Malaysian Airlines has gone through some tough times, AirAsia has grown robustly to become the biggest low-cost carrier in Asia. | |
Analysts say the rise of AirAsia has intensified the two carriers' competition and rivalry. | |
"Malaysian airlines decided that they want to take on AirAsia directly on routes where the later flies," said Siva Govindasamy of Flight Global. | |
"That effectively meant price competition, which is not good for business." | |
Mr Govindasamy said the deal will reduce direct competition, helping both airlines to concentrate on their area of specialisation. | |
His views were echoed by Juliana Ramli of HwangDBS Vickers Research who added "the deal could help reposition and turn around MAS as a premier long-haul carrier." |
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