AirAsia announced to renounce setting its joint venture airline in Vietnam, just two years after confirming the launching of the new subsidiary. This is the second time that AirAsia pulls out of Vietnam…
Back to March 2017, AirAsia announced the formation of a joint venture (JV) to establish a low cost carrier in Vietnam. The airline indicated by then that its affiliate Air Asia Investment Ltd, has signed a shareholders agreement and a share subscription agreement with Gumin Company Ltd, businessman Tran Trong Kien, and Hai Au Aviation Joint Stock Company (HAA) to set up the LCC.
AirAsia Investment would hold a 30% stake in the JV Company, Gumin 69.9% and Tran Trong Kien, the remaining share. The JV had an initial capitalization of VND one trillion (US$43.8 million). As recently as December last year, AirAsia reaffirmed its intention to set up the joint-venture low-cost carrier in Vietnam, when it signed a memorandum of cooperation with Tran and HAA in Hanoi during the Vietnam Travel and Tourism Summit 2018.
In a filing with Bursa Malaysia today, AirAsia said its wholly-owned subsidiary AirAsia Investment Limited (AAIL), together with Gumin Company Ltd and Hai Au Aviation Joint Stock Company (HAA), have amicably agreed to terminate and release each other from all obligations in relation to the proposed joint venture in Vietnam, effective immediately.
Nonetheless, AirAsia said the group remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential. Vietnam air transport is one of the fastest growing air transport market in Southeast Asia with its airports recording over 100 million passengers in 2018. Vietnam three largest airports -Ho Chi Minh City, Hanoi and Danang welcome together close to 79 million passengers last year.
“The termination of the joint venture is not subject to the approval of the company’s shareholders and is not expected to have any financial impact on the net assets or gearing of the company,” AirAsia added.