Airlines

AirAsia's Fernandes says looking for a partner in China

Is a China joint venture on the cards for AirAsia?
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Is a China joint venture on the cards for AirAsia?
AirAsia CEO: 'I want to simplify the business'
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AirAsia CEO: 'I want to simplify the business'

Low-cost carrier AirAsia Group's chief Tony Fernandes said he would love to have a joint venture in China, to tap into the booming travel industry in the world's second-largest economy.

"I believe there is a strong chance of that happening so we have to wait and see," said Tony Fernandes, group chief executive officer of AirAsia Group, in a CNBC exclusive.

While several interested parties have approached the Malaysia-based airline, Fernandes said it's still early days in the hunt for the right partner.

Developing the China business would be more than just ferrying Chinese tourists, he noted.

AirAsia Group CEO Tony Fernandes speaks at a press conference in Sydney on March 12, 2015.
Peter Parks | AFP | Getty Images

"Everyone looks at just bringing the Chinese out, but we have a dual market where a lot of Southeast Asians are going out to China," Fernandes said.

AirAsia currently flies to 15 Chinese destinations, including secondary and tertiary cities. China contributed nearly 19 percent to the budget carrier's 2015 revenue, according to its chief executive.

But AirAsia wouldn't necessarily be looking at China's largest cities.

"We are not interested in developing what has already been developed...what we have been good at is developing new markets, new traffic, and opening up different parts of China," he added.

Additionally, the budget carrier has been eyeing a new listing in Hong Kong as it expands into North Asia, Reuters had reported in July.

"A consolidated AirAsia where we own 100 percent of all the airlines, can be moved forward through a different listing," Fernandes told CNBC.

Airfares this fall expected to drop 8%
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Airfares this fall expected to drop 8%

According to reports, AirAsia is looking to sell its leasing arm, but that might not be all.

Fernandes told CNBC that the aim is for "a simple airline," which might also include selling the ancillary businesses.

"I want to simplify the business, simplify the accounts on the consolidation aspect, so analysts and everyone else can understand it," he said.

"The stock market is not giving us any value for what I call my non-core businesses ... if you add all those businesses up, its about 5.5 billion ringgit ($1.37 billion) in value," he said.

Shares of AirAsia Group have risen 133.33 percent year-to-date. The company will report second-quarter earnings on August 29.

AirAsia is expected to post stronger revenue and net earnings, year-on-year, on the back of strong operating statistics and cheaper jet fuel prices, according to a note by Daiwa Capital Markets on Wednesday.

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