AirAsia's minority structure clouds impact of air crash
AIRASIA is sharing the pain of its minority investments. The Malaysian budget carrier owns just 49 per cent of the Indonesian unit that was struck by tragedy when one of its planes crashed into the Java Sea on Dec 28. AirAsia shares have since lost more than 15 per cent of their value. Shares in its smaller budget long-haul affiliate AirAsia X have fallen 8 per cent. The Malaysian benchmark index fell 3 per cent over the same period.
It's a reminder that the group's particular business model can't entirely contain the financial pain.
Apart from Indonesia, AirAsia operates a series of minority-owned affiliates in Thailand, the Philippines and India. This allows it to get around foreign ownership rules. Accounting rules also partly insulate the parent from profit fluctuations in Indonesia. Although the unit has recently returned to the black, AirAsia won't book its share of any gains until earnings exceed the division's accumulated losses.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Transport & Logistics
Toyota and Nissan pair up with Tencent and Baidu for China AI arms race
China's largest auto show displays all-electric future, local brands dominate
Toyota hits record annual output, sales on robust demand
Nissan, Mazda roll out new models for China as they aim for comeback
VinFast chief plans to invest US$1 billion more from his fortune in EV maker
XPeng CEO says its software, AI upgrades to enter ‘super fast cycle’