Plans for a major cross-ownership agreement have been confirmed by Malaysia's two biggest carriers under which low-cost carrier AirAsia's parent Tune Air will take a 20.5% stake in network carrier Malaysia Airlines.
Under the comprehensive collaboration agreement Malaysia Airlines' largest shareholder, Khazanah Nasional, is in turn set to take a 10% stake in AirAsia. It also plans to acquire a 10% stake in long-haul unit AirAsia X.
"Broadly, the collaboration agreement enables MAS, AirAsia and AirAsia X to respectively focus on business segments in which they are capable of developing the most value," Khazanah says in a statement.
It says the early phase of collaboration will focus on "immediate synergy opportunities" which can be realised without significant effect on any party's operations, but the deal envisages more detailed collaboration following completion of a full anti-trust review by all three companies.
MAS chairman Md Nor Yusof said: "We believe that the joint collaboration will help MAS focus on our strengths in our core markets and work towards deriving higher loads and more efficient resource utilisation.
"We will also be able to offer services in engineering and other areas to both AirAsia and AirAsia X. Firefly's resources would be refocused to launch a new regional full service airline operation."
AirAsia chief executive officer and AirAsia X director Tony Fernandes said: "By focusing on core competencies, it will enable both parties to increase product offerings to our respective customers.
"AirAsia and AirAsia X see growth opportunities in new routes and destinations. Our business model requires us to continue to reduce prices in order to increase volumes for consumers in the low-cost travel segment which we can now focus on in a more significant way."
Trading in the two companies' shares had been suspended since yesterday amid speculation of the tie-up.
Malaysia Airlines, which recorded a net profit of $73 million on revenues of $4.24 billion in 2010, operates a mix of 93 aircraft.
Fast-growing AirAsia, which also has stakes in a number of overseas affiliate carriers, recorded profits of $330 million on $1.23 billion revenue last year.