AirAsia to shed its long haul business ahead of a 2011 initial public offering

MALAYSIAN budget airline, AirAsia is planning to publicly list its long haul business next year as the company undergoes a restructuring.

AirAsia X, the long haul arm, said yesterday it is gearing up for an initial public offering during the second half of next year, subject to market conditions, in a bid to fund further expansion.

The airline, which is part owned by Sir Richard Branson’s Virgin Group, is currently trying to raise 100m ringgit (£20.8m) through a rights issue to help with financial independence.

“This arrangement gives AirAsia X financial independence and the latitude to develop its own marketing strategy,” said AirAsia chief executive Tony Fernandes.

AirAsia’s business model, which also includes a short haul network, has began to show signs of dilution, according to Fernandes, which led to the decision to take AirAsia X down a new route.

The group’s long haul operation has flown more than 2m passengers and is projected to post 2010 revenue of 1bn ringgit.

AirAsia X could re-brand, although the airline said it is currently assessing whether or not it will do so. For now it will continue to use the AirAsia brand.

Fernandes said: “It is a fantastic product and service and we see this reorganisation as symbolic of it coming into its own.”