This article first appeared in The Edge Financial Daily on November 12, 2019

KUALA LUMPUR: AirAsia Group Bhd said its wholly-owned unit AirAsia Bhd (AAB) has transferred two of its slots on the Kuala Lumpur-Singapore route, involving 14 flights, to its long-haul sister company, AirAsia X Bhd (AAX).

It said AAX will share 50% of the net operating profit of the route with AAB on a monthly basis under an agreement between them.

“The transaction will provide an opportunity for AAB to heighten the ‘fly-thru’ market which has remained stagnant since 2017 and benefit from the additional capacity which doubles up to AAB’s current capacity,” said AirAsia Group in a filing with Bursa Malaysia.

The one-year agreement, it said, may be renewed for another year by mutual agreement.

It added that the airport slots will be returned to AAB if AAX’s performance on the route does not meet the mutually agreed expectations.

AirAsia Group said Tan Sri Tony Fernandes and Datuk Kamarudin Meranun are deemed interested in the transaction and they have abstained from all related management and board deliberations.

Fernandes has a direct stake of 0.05% or 1.6 million shares and an indirect shareholding of 32.18% or 1.08 billion shares in AirAsia Group, while Kamarudin holds a direct stake of 0.06% or two million shares and an indirect shareholding of 32.18% or 1.08 billion shares in the group.

The group said the transaction will not have any material financial impact on the current financial year nor will it have any effect on the issued and paid-up share capital or substantial shareholders’ shareholding.