AirAsia, Malaysian deal has ramifications for Qantas

AirAsia is headed for a major share swap with Malaysian Airlines in a deal designed to save the struggling national flag carrier, according to reports from Kuala Lumpur this week.

The deal would see AirAsia's owner gain 20 per cent of the equity in its loss-making rival, both the Star and New Straits Times reported.

The papers, quoting unnamed sources, said that a partnership deal between the long-time rivals could be signed within days.

"It's a done deal, and it would mean that we could compete better," the Times quoted a source close to the deal as saying.

Malaysia Airlines in a statement to AFP declined to comment at the time, saying that "this is a shareholder matter".

But two days later the airline issued a statement confirming the major share swap deal and that Tony Fernandes and Kamarudin Meranun would become non-executive directors; while CEO Azmil Zahruddin will leave the airline to head a government investment board. Six other directors have also stood down.

The Star reported that the deal had been negotiated over the past 12 months in a bid to provide a lifeline for the national carrier.

Under the deal, Khazanah will get a stake in AirAsia, while Tune Air, which owns 26 per cent of AirAsia, would get a stake in Malaysia Airlines.

Tune Air is headed by AirAsia CEO Tony Fernandes and another partner.

This is a move that will have particular interest for Qantas, with its proclaimed interest in building a solid future in Asia, via both the Jetstar and main brands.

There's also the little matter of Malaysian Airlines being sponsored by Qantas CEO Joyce for membership of oneworld at the recent IATA AGM in Singapore.