ANA, AirAsia to unwind budget airline joint venture

Tue Jun 25, 2013 6:09am EDT
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TOKYO/KUALA LUMPUR (Reuters) - ANA Holdings Inc (9202.T: Quote) will buy AirAsia Bhd (AIRA.KL: Quote) out of a Japanese budget airline joint venture for 2.45 billion yen ($25.11 million), the Malaysian low-cost carrier said, dissolving a loss-making alliance after less than two years.

The venture, based at Tokyo's main international airport in Narita, has failed to win over Japanese travelers since it was set up in August 2011. ANA, which owns 67 percent of the venture, has blamed the poor performance of AirAsia Japan on ineffective marketing and a user-unfriendly booking website.

Differences in opinion on issues ranging from cost management to where the business should be based contributed to the breakup, AirAsia said in a statement on Tuesday.

The split comes at a time when AirAsia is planning to expand overseas. The pullout from the venture, however, is consistent with AirAsia's past decisions to drop loss-making routes.

"I remain positive on the Japanese market and believe there is tremendous opportunity for a low-cost carrier to succeed," AirAsia Group CEO Tony Fernandes said in the statement.

"We have not given up on the dream of changing air travel in Japan and look forward to returning to the market," he added.

AirAsia Japan has been reporting losses since it began operations with flights to five local destinations and two in South Korea.

The venture cut ANA's operating profit by about 3.5 billion yen in the year ended March, ANA's Senior Vice President Shinzo Shimizu said on Tuesday.

"We judged it would be better to operate the carrier as a wholly owned unit," Shimizu said at a press conference in Tokyo.   Continued...

Aircraft of Japan's second-largest airline All Nippon Airways Co., Ltd. (ANA) sit parked at Haneda airport in Tokyo January 17, 2009. REUTERS/Stringer