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NEW FOCUS: Khazanah nominee also leaves AirAsia board in unwiding of share-swap deal
KUALA LUMPUR: TAN Sri Tony Fernandes and Datuk Kamaruddin Meranun, the major owners of AirAsia Bhd, resigned from the board of Malaysian Airline System (MAS), after the major shareholders of both airlines agreed to unwind the share-swap deal.
Datuk Azman Yahya, Khazanah Nasional’s nominee on AirAsia’s board, resigned from the low-cost carrier’s board, as announced in a filing to Bursa Malaysia yesterday.
The unwinding of the deal will see Khaza-nah transfer its 10 per cent stake in AirAsia back to Tune Air Sdn Bhd, while Tune Air will transfer its 20.5 per cent stake in MAS back to Khazanah, the government’s investment holding arm. No
cash will change hands in the transaction.
The free warrants that were to be given to shareholders of both airlines will not be executed. Khazanah managing director Tan Sri Azman Mokhtar said the deal had caused “unintended and unfortunate confusion” among its stakeholders.
“With this reset, we hope and believe that it will give all parties renewed impetus to refocus and move forward together in the interest of MAS and the nation.”
However, both airlines, along with AirAsia X Sdn Bhd, will continue to work together to improve their operating efficiencies. They agreed to look into the setting up of joint venture companies on joint procurement as well as providing aircraft component maintenance support and repair services.
The share-swap deal was part of a comprehensive collaborative framework (CCF) signed by MAS, AirAsia and AirAsia X in August. Under the agreement, the three parties were to explore opportunities to cooperate to leverage their core competencies and optimise efficiencies.
The agreement was also to help both carriers compete against regional rivals once the Southeast Asian open-sky policy comes into effect in 2015. However, the deal was not well received by the national carrier’s 20,000 union members, as they saw the tie-up as a takeover of the national carrier by Fernandes.
Azman said: “The cross-holding shares were well-intended to better align the economic interests on the part of the major shareholders, Khazanah and Tune Air.
"After eight months, however, our assessment is that the cross-holding of shares has become a distraction to the management's efforts to turn around MAS and win stakeholders' support for collaboration.
"To be clear, it is worth noting that contrary to some reports, the CCF did not cause or contribute to the recent losses that were announced by MAS, as this was incurred well before the CCF was in place.
"Neither did the government at any time cede control of MAS, by virtue of its 49 per cent shareholding and the golden share."
MAS Group chief executive officer Ahmad Jauhari Yahya said MAS, AirAsia and AirAsiaX agreed to enter into a supplemental collaboration agreement (SA) to explore areas of mutual need to realise savings and boost efficiencies.
Under the SA, which was a refined version of the CCF signed on Aug 9 last year, the three airlines had identified areas for collaboration that would result in efficiencies and cost savings, eventually translating into benefits for customers, shareholders and Malaysia, he added.
Ahmad Jauhari said the MAS board had approved the national carrier to enter into a memorandum of understanding with AirAsia and AirAsia X to cooperate on joint procurement and aircraft components, maintenance support and repair services.
An analyst said the unwinding of the share-swap deal would help MAS focus more on turning the company around.
OSK Research Sdn Bhd head of research Chris Eng said: "The management should also take the opportunity to discuss with the unions to come up with a realistic, but still painful, turnaround plan.
"I believe MAS would need to make some sacrifices for the long-term benefit of the company," he added.