AirAsia X heads for IPO as group strategy changes

AirAsia Group is embarking on a corporate and organisational restructuring to provide investors with a clearer and more focused business model, which will include an IPO for AirAsia X.

The Group is moving away from consolidating all businesses into a single investment entity towards having separate publicly-listed entities that “give investors clear choices to invest based on geographic and business model foci. Investors may choose to invest in the countries where AirAsia is based – currently including Malaysia, Thailand and Indonesia – and in the short-haul or long-haul business model”.

AirAsia Group chief executive officer, Tony Fernandes, explained, “After more than two years of operation, we have begun to notice some dilution of the AirAsia business model and recognise the need for AirAsia and AirAsia X to retain focus on their respective markets. Nevertheless, we are extremely pleased with how quickly AirAsia X has grown in the two and a half years since its birth.

“It is a fantastic product and service and we see this reorganisation as symbolic of it coming into its own as it flies into its next growth phase. This arrangement gives AirAsia X financial independence and the latitude to develop its own marketing strategy. While it continues to capitalise the strength of the AirAsia brand, website and culture this separation gives more focus and discipline to AirAsia X’s model.”

AirAsia X, launched in November 2007, is now achieving sufficient economies of scale to stand on its own instead of relying on services provided by AirAsia. AirAsia X achieved audited revenues of RM720 million in 2009 and is projected to exceed RM1 billion revenue in 2010, in just its third full year of operations. It booked a net profit of RM87 million in 2009. AirAsia X has carried two million passengers to date.

AirAsia X is therefore planning a public listing in the second half of 2011, subject to market conditions. It is currently completing a RM100 million Rights Issue exercise to achieve financial independence and fund its continued growth.

Organisationally, AirAsia X will take over employment of its own widebody pilots, cabin crew and ground staff as well as its commercial and marketing team. This will enable AirAsia X to aggressively pursue its own commercial strategy and better develop capabilities in long-haul services.

The new model will allow both AirAsia Berhad and AirAsia X to pursue a clearer and more focused business strategy, attract relevant investor profiles and still achieve the competitive advantage of having common-branded short-haul and long-haul networks strategically feeding each other. AirAsia Berhad will benefit from accessing growth markets in North Asia, Australia, India and Europe that will be fed from AirAsia X’s trunk routes. On the other hand, AirAsia X will be able to attract guests in these markets with AirAsia’s network of destinations across southeast Asia.

AirAsia X will continue to use the AirAsia brand and website as part of its 30-year Brand License Agreement with AirAsia Berhad.

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