AirAsia buys bosses' plane

PETALING JAYA: AirAsia Bhd is buying Tune Group Sdn Bhd's private jet plane, used primarily by its executive chairman Datuk Kamarudin Meranun and group chief executive officer (CEO) Tan Sri Tony Fernandes to carry out their airline business, for US$10 million (RM40.26 million).The purchase, the low-cost carrier said, would enable Kamarudin and Fernandes to continue enjoying the benefits of flying private, while at the same time, saving the company some money.

In a statement to Bursa Malaysia yesterday, AirAsia said the private jet would be paid for in cash from the company's internally available funds.

AirAsia entered into a deal with Caterhamjet Global Ltd (CJG) for the acquisition of one unit of Bombardier BD-700-1A10 Global Express 9M-CJG.

CJG is a unit of Tune Group, which was founded by Kamarudin and Fernandes.

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CJG had purchased the aircraft for US$24 million on July 6, 2012 and refurbished the aircraft for US$0.7 million the subsequent year. It added that private jet prices in Asia have declined over the past two years since the slowdown in the regional economy, which makes Global Express relatively cheap to acquire at the moment.

"Acquiring Global Express and bringing the flight and maintenance crew back into AirAsia would allow the company to save on this additional cost," it said.

Kamarudin and Fernandes have been using the jet since 2012.

"As CJG is planning to sell the jet, the loss of the aircraft would mean that the executive chairman (Kamarudin) and the group CEO (Fernandes) will no longer be able to benefit from the convenience and efficient transport provided by Global Express when travelling to AirAsia's associates for work, as they would have to rely on commercial flights which may be infrequent or inconveniently-timed," it said.

AirAsia said that this would result in significant loss of productivity due to inefficient waiting times, especially with the high volume and frequency of travel undertaken by Kamarudin and Fernandes.

"Flying commercial would also mean that the executive chairman and the group CEO would not be able to conduct business discussions or hold meetings with senior management as they currently do in the private space of Global Express, adding to the inefficiency," it added.

It also said the current commercial agreement with Tune Group was not efficiently structured, as AirAsia had to pay the salaries of the staff it had seconded to Tune Group to operate Global Express, incurring the goods and services tax in the process.

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"Absorbing the staff would also allow them to be better utilised, as they can be deployed to other operational functions within AirAsia and not just those associated with Global Express," it said.

AirAsia said it would be able to leverage on its size and relationship with vendors and suppliers, especially those related to the aircraft components and maintenance, to potentially lower operating costs further.

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