AirAsia looks to consolidate despite regulatory hurdles

Business


Anusak Laowilas | NurPhoto | Getty Images

An AirAsia plane takes off at Don Mueang International Airport on January 15, 2017 in Bangkok, Thailand.

Conditions in the oil and currency markets are also helping to boost the business, according to the CEO.

“Oil has been in the best position it’s ever been in,” Fernandes said. I’m not saying it’s the lowest it’s ever been, but it’s range-bound now… we’ve reached stability in oil price.”

“And I think it’s going to stay that way because of shale, because of the sharing economy with Uber and Grabcar… And renewables are here to stay,” he added.

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

The weak Malaysian currency has also boosted the country’s inbound tourism, which is a boon for AirAsia, according to Fernandes.

“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.

For all those positives, however, key challenges stand in AirAsia’s way of becoming a publicly-listed holding company. AirAsia must first negotiate with several governments to completely own each of its airlines “by swapping partners’ stakes into shares in the main holding company,” CIMB said.

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

Fernandes nonetheless said he believes in taking things one step at a time. “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.



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