In a long expected move, Malaysian low cost carrier, AirAsia today announced its decision to terminate its participation in the joint venture with ANA Holdings Inc. under the AirAsia Japan brand with the signing of a termination agreement.
The joint venture, created two years ago under the name AirAsia Japan faced many challenges since its launch. Issues stemmed from a fundamental difference of opinion between its shareholders on how the business should be managed from cost management to where the domestic business operations should be based.
AirAsia Berhad through AirAsia Investment Ltd. had subscribed 25,120 voting shares and 23,880 non-voting shares at JPY 50,000 per share, which represented forty-nine percent (49%) of the paid-up share capital in AirAsia Japan.
The termination comprises an acquisition of AirAsia’s entire shareholding in AirAsia Japan by ANA Holdings Inc. for JPY 2,450,000,000 (approximately US$ 25.17 million). The termination also involves the return of all AirAsia aircraft leased to AirAsia Japan by November 1, 2013 and the payment of all monies accrued from the leasing of the aircraft.
Under the termination, AirAsia Japan will also settle all outstanding invoices due to AirAsia accrued from the commencement of operations. AirAsia Japan will unwind the use of the AirAsia brand in its operations, including the name of AirAsia Japan itself by November 1st 2013. Operations of AirAsia Japan flights up to October 31st 2013 will continue as planned.
Following the transfer of shares and payment of the purchase price, the Shareholders Agreement, the Brand License Agreement and other commercial contracts between the parties will be terminated immediately.
On the termination, AirAsia Group CEO Tony Fernandes said,
“I have great respect for ANA as the leading legacy airline in Japan but it is time for us to part ways and focus our attention on what we do best, which is running a true LCC. Despite the cost issues, the AirAsia brand has resonated with Japanese customers and the trend we see for July and August is very strong for all of Japan. I remain positive on the Japanese market and believe there is tremendous opportunity for a LCC to succeed, as proven by the tremendous success AirAsia X has seen. We have not given up on the dream of changing air travel in Japan and look forward to returning to the market.”
Operations of AirAsia X, the long haul low fare affiliate of AirAsia Group will not be interrupted as a part of this termination. AirAsia X will continue its operations into Japan including Kuala Lumpur to both Tokyo (Haneda) and Osaka (Kansai).