The cross-ownership agreement between Malaysia Airlines (MAS) and AirAsia has officially been terminated.
AirAsia's parent Tune Air and MAS' largest shareholder Khazanah Nasional announced on 2 May the reversal of the share swap agreement inked in August 2011, while pledging to continue collaboration in certain key operation areas.
The reversal will see Tune Air transfer its 20.5% stake in MAS back to national investment agency Khazanah, while Khazanah will transfer its 10% stake in AirAsia back to Tune Air.
On the same day, Tune Air director Kamarudin Meranum and AirAsia chief executive Tony Fernandes resigned from MAS' board while Khazanah's Azman Yahya resigned from the low-cost carrier's board.
"The cross-holding of shares was well-intended to simply better align the economic interests on the part of the major shareholders Khazanah and Tune Air. After eight months, however, our assessment now is that the cross-holding of shares became a distraction to the management's efforts to turn around MAS and win stakeholders' support for collaboration," says Khazanah's managing director Azman Haji Mokhtar.
With the termination, however, MAS, AirAsia X and AirAsia have also inked a supplemental collaboration agreement to work on areas such as procurement, aircraft component repairs, training, technical and operational efficiency and to champion common industry issues.
To push forward the collaboration, the three carriers signed a memorandum of understanding (MoU) to cooperate on two initial areas - joint procurement and aircraft component, maintenance support and repair services.
On procurement, the carriers will explore the potential of out-sourcing procurement work related to items such as fuel and oils, insurance, IT and communications, to a mutually owned joint venture. The airlines will also consider setting up a joint venture for aircraft 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 to improved financial results," says MAS chief executive Ahmad Jauhari Yahya.
Industry sources earlier told Flightglobal Pro that the cross-ownership agreement ran into opposition "from day one" as MAS employees felt they were not consulted and subsequently sidelined and that Fernandes' "abrasive style" did not go down well with employees.
In August 2011, a comprehensive collaboration framework was set up to enable MAS, AirAsia and AirAsia X to collaborate on a broad range of areas to bring about costs savings and efficiency.
Part of the framework includes entering into a share swap to align the interests of the primary stakeholders of MAS and AirAsia.
"Although the share swap has to be unwound, the collaboration over the past eight months has brought MAS and AirAsia closer together," says Meranum, who adds: "10 years of non-collaboration and unnecessary struggle between us has come to an end and we are now able to focus on our markets and core competencies."