AirAsia may bid for Virgin Atlantic

Air Asia

Air Asia

If newspaper reports are to be believed, Malaysian budget carrier AirAsia’s CEO is contemplating acquiring the British carrier Virgin Atlantic.

It is speculated that Asia’s biggest budget airliner – by fleet size, has renewed its interest for majority ownership in the UK carrier. Tony Fernandes – the CEO of AirAsia had evinced interest in Virgin Atlantic before but eventually decided against bidding.

The possible takeover bid news remains speculative in nature since neither Virgin nor AirAsia commented on it. The deal should be valued over £1 billion.

Singapore Airlines had paid £600 million in 2000 for a 49 percent stake in Virgin Atlantic. Billionaire businessman Richard Branson owns the controlling stake of 51 percent in the airliner.

The airline had hired Deutsche Bank to assess the aviation market and have reported to have received many ‘lines of enquiry’ for a possible tie-up with its rivals. Although it refused to divulge the name of the interested rivals, it said the bank study will last for the next few months.

Many carriers profit margin have fallen after the entry of low cost carriers. The problem has been compounded by rising jet fuel costs and weak consumer demand.

Experts believe that large carriers like Virgin require low cost partners to beat the competition since the low cost carriers have already gone through a phase of consolidation and have matured in their operations.

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