odie
Posts: 1581
Joined: Tue Jan 30, 2001 8:55 am

Air Asia Sold To Tune Air, Tie-up With Virgin?

Fri Sep 07, 2001 3:38 pm

Air Asia, Malaysia's second national carrier told the Malaysian Press today that it was sold to Tune Air. Anybody knows what company that is? It is also said that it might be related to Virgin of UK, but this is just a rumor! Is this true? Since SIA owns 49% of Virgin, and if Virgin owns this airline (Air Asia), this could mean that SIA wants to get into the Malaysian aviation market. With MAS out of reach to other foreign parties, this little airline may well have potential to be foreign-owned. Anyway, The Virgin office in UK denied this link with Air Asia. Is this some sort of news where they create to spice up the news in Malaysia? Here's the press release:

Little-known Tune Air Sdn Bhd, which bought into Malaysia's second domestic carrier Air Asia yesterday, is believed to be making plans to take wing as a major regional player. The company has bought loss-making Air Asia from DRB-HICOM Bhd via a partial debt-for-equity deal, which is said to be a prelude to a bigger exercise involving Britain's Virgin Atlantic.

Sources said the new owners have big plans for Air Asia, and its impact on the aviation industry is virtually assured should a tie-up with Virgin Atlantic materialize. When contacted by Business Times, an official from Virgin Atlantic's press office in London said: "We have no knowledge of any such development. "The aggressive British carrier, founded by maverick and flamboyant entrepreneur Richard Branson, is currently ranked 39th in the world. And it is 49 per cent owned by Singapore Airlines, which the latter bought from Branson last year.

"We may well see Virgin Atlantic operating into Kuala Lumpur eventually. Right now, it is tied to a 10-year code-share arrangement with Malaysia Airlines. But this will end in 2005," a source said. Under the code-share arrangement, Malaysia Airlines uses its own aircraft on the Kuala Lumpur-London route but allocates 35 seats per aircraft to Virgin Atlantic on the night flights and 37 seats on the day flights.

DRB-HICOM said in a statement yesterday that it has signed an agreement to sell its entire 99.25 per cent stake in Air Asia Sdn Bhd, the operator of Air Asia, to Tune Air for a nominal sum of RM1.00. The interest is currently held by DRB-HICOM's wholly owned subsidiary HICOM Holdings Bhd. Under the deal, Tune Air will assume 50 per cent of Air Asia's net liabilities, which sources said, are in the region of RM140 million.

Air Asia was incorporated on December 20 1993, but began flying only three years later. It currently operates two 737-300s and mounts scheduled flights to Kota Kinabalu, Kuching, Labuan and Langkawi. The airline also offers scheduled charter flights to several destinations. The people behind Tune Air is said to include Tony Fernandez, chairman of Recording Industry Association of Malaysia (RIM). A source would not rule out a tie-up between Virgin Atlantic and Tune Air, noting that "Fernandez is known to aspire to be Richard Branson of the East.

"And people are not scoffing at the idea because Fernandez has what it takes," the source said. Analysts contacted by Business Times meanwhile said the disposal of Air Asia is a positive development for DRB-HICOM, given that "the airline has long been a burden for the group". DRB-HICOM registered a lower group pre-tax profit of RM29.21 million for the quarter ended June 30, down from RM85.92 million in the same period a year ago.

Regards.