AirAsia moves closer to setting up JV carrier in China

AirAsia airplane is seen at the Garuda Maintenance Facility AeroAsia, the aircraft maintenance and repair unit of Indonesian flag carrier PT Garuda Indonesia Tbk, in Tangerang, Indonesia, September 20, 2017. REUTERS/Beawiharta

KUALA LUMPUR: AirAsia Bhd is moving closer to setting up a joint-venture (JV) budget airline in China, having entered into a non-binding term sheet with China Everbright Group and two other companies on Friday last week.

In an announcement to Bursa Malaysia on Monday, the low-cost carrier said the term sheet, whose signatories included Singapore-based  Plato Capital Ltd and Oxley Capital Ltd, intended to confirm the parties’ interest in forming the JV and contained supplementary information to an earlier memorandum of understanding (MoU).

On May 14, AirAsia signed an MoU with Everbright - a conglomerate under the direct supervision of state-owned Assets Supervision and Administration Commission of China’s State Council - and Henan Government Working Group.

Their target JV airline, to be known as AirAsia (China) in China, will be established either through an acquisition or by obtaining a new airline licence.

 Under the 12-month MoU, it is intended that AirAsia (China) will submit an application for an operating permit in China to Civil Aviation Administration of China (CAAC).

In addition to the airline, the JV will also look into developing infrastructure.

The JV will invest in developing for pilots, engineers and crew training as well as a maintenance, repair and overhaul provider (MRO).

The parties have also expressed interest to incorporate AirAsia (China) in Zhengzhou which is intended to be AirAsia (China)’s operating base and headquarters.

The term sheet signed on Friday, Sept 25, is valid for no longer than 12 months for the parties to discuss and negotiate definitive agreements for the proposed JV.

Plato is an investment holding company listed on the Singapore Exchange Securities Trading Ltd, while Oxley is an innovative private investment firm and multi-family office specialising in real estate, agriculture/alternative energy, natural resources sectors and investments across the Asia-Pacific region.