Press Room

Malaysia Airlines to Focus on Collaboration with AirAsia

Subang, Wednesday, 2 May 2012: Malaysian Airline System Berhad (“MAS”), AirAsia Berhad (“AirAsia”) and AirAsia X Sdn Bhd (“AirAsia X”) have agreed to enter into a Supplemental Collaboration Agreement (“SA”) to explore areas of mutual need to realize savings and boost efficiencies.

Through the understanding and work carried out in relation to the Collaboration Agreement (“CobA”) signed previously on 9 August 2011, MAS, AirAsia and AirAsia X have refined the focus of the CobA through the SA. The SA will focus on specific areas of collaboration while continuing to comply with all relevant anti-trust laws.

The SA between MAS, AirAsia and AirAsia X is also part of preparations by Malaysia's three largest airlines to meet the challenges brought by ASEAN Open Skies which comes into force in 2015.

Under the SA, the three airlines have identified key areas for collaboration which would result in efficiencies and cost savings, eventually translating into benefits for customers, shareholders, and Malaysia in general.

The key areas identified are procurement, aircraft component repairs, training, technical and operational efficiency, as well as mutually championing common industry issues.

The airlines will also continue working to further identify and evaluate opportunities to collaborate on a broad range of areas both at operational and strategic levels.

To push forward on the collaboration initiative, the Board of Malaysia Airlines has approved the national carrier to enter into Memorandum of Understandings (“MoU”) with AirAsia and AirAsia X to cooperate on two initial areas – joint procurement and aircraft component, maintenance support and repair services.

“Recovery of the business is our main focus along with initiatives to strengthen the balance sheet and operations through improved productivity, increasing revenue and lowering costs. These efforts will translate into improved financial results,” said MAS Group Chief Executive Officer Ahmad Jauhari Yahya.

“Collaboration is a game-changer in our Business Plan to build a sustainable business for the future. We will continue to drive these collaborations with AirAsia and AirAsia X as it will enable MAS to exploit potential synergies and efficiency gains. It is important to find all ways to do our business more efficiently and with lower costs.”

“By doing this well, we will be able offer improved services and products to customers as we build our brand as The Preferred Premium Carrier, and in the end, create value for shareholders.”

The collaboration initiative between the airlines on procurement will be by exploring the potential out-sourcing of procurement activities to a mutually-owned joint venture company (“JV”). Key areas in procurement to be explored could include high spend items such as fuel and oils, insurance, IT and communications.

In aircraft component maintenance support and repair services, the airlines will explore the setting up of a JV including identifying its viability and structure.

"The synergistic collaboration between MAS, AirAsia and AirAsia X is a logical solution in our effort to increase efficiency and productivity as well as reduce costs. Being well-known for our warm hospitality and service is no longer enough for MAS to remain afloat and compete,” added Ahmad Jauhari.

Pursuant to the announcement that Khazanah Nasional Berhad (“Khazanah”) and Tune Air Sdn Bhd (“Tune Air”) will be unwinding of the Share Swap Agreement signed in August 2011, MAS and AirAsia will terminate the agreement to issue warrants to each other’s shareholders.

The unwinding of the Share Swap will also see the resignation of Khazanah’s nominee director on AirAsia’s Board and Tune Air’s nominee directors on the MAS Board.        

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