AirAsia attempts to stay buoyant

AIRASIA   PROFITS   MALAYSIAN AIR

Malaysia - With the country's low-cost carrier posting a dramatic 48% drop in second-quarter profits, AirAsia has decided to swap 10% of its stake in exchange for 20.5% of Malaysian Air's.

AirAsia has been in talks with Airbus to extend its existing order of 200 A320neo aircraft following the partnership, according to an official spokesperson.

The two companies will be working together in areas such as cargo, plane-purchasing, and opening of new routes, Gulf News reported.

The fall in profits was due to higher fuel costs that offset gains from an increase in passenger traffic.

The airline's "forward bookings are looking very strong", according to AirAsia's CEO Tony Fernandes, contrasting with Malaysian Air's belief that losses are likely to be incurred in the second half.

"They are very different businesses altogether," said Mohshin Aziz, an analyst at Maybank Investment Bank.

He added that AirAsia is very cost-efficient, while Malaysian Air has a high cost structure and is "nowhere near".

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