AirAsia moves closer to setting up JV carrier in China
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Airasia 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 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.
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Questions & Answers
Q.Which entities are involved in the non-binding term sheet for the new joint venture?
Which entities are involved in the non-binding term sheet for the new joint venture?
The non-binding term sheet was signed by AirAsia, China Everbright Group, Singapore-based Plato Capital, and Oxley Capital Ltd. These parties are confirming their interest in forming the joint venture.
Q.What is the intended location for the joint venture's headquarters and operating base?
What is the intended location for the joint venture's headquarters and operating base?
The parties have expressed interest in incorporating AirAsia (China) in Zhengzhou. This city is intended to serve as both the operating base and the headquarters for the new airline.
Q.What additional infrastructure and services will the joint venture develop in China?
What additional infrastructure and services will the joint venture develop in China?
Beyond the airline, the joint venture will invest in developing infrastructure for pilot, engineer, and crew training. It will also establish a maintenance, repair, and overhaul provider (MRO).
Q.How long is the non-binding term sheet valid for further negotiations?
How long is the non-binding term sheet valid for further negotiations?
The non-binding term sheet, signed on Friday, September 25, is valid for no longer than 12 months. This period allows the parties to discuss and negotiate the definitive agreements for the proposed joint venture.
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