AirAsia fell despite reports of possible acquisition

AirAsia Bhd shares on Bursa Malaysia fell by as much as 1.03 per cent (down 3 sen) during early trade, after a foreign media reported that the budget carrier may be buying a 40 per cent stake in Philippine-based budget carrier Zest Airways.

Its shares were traded as high as RM2.87 during the first few minutes of the trading session, however, its shares started to show signs of weakness soon after.

At 10:17 am, AirAsia shares was traded at RM2.80, down by 2 sen, with more than 1.53 million shares changed hands.

According to a report by Philippine Daily Inquirer, cited sources, negotiations have reached an advance stage toward the prospective airline alliance.

AirAsia, the biggest budget carrier in Southeast Asia, is controlled by businessman Tan Sri Tony Fernandes while Zest Airways is led by the group of Filipino-Chinese tycoon Alfredo Yao.

Yao, founder of the Zest-O group and chairman emeritus of newly listed Philippine Business Bank (PBB), is expected to keep majority ownership of ZestAir but might cede management control of the airline in favor of the Malaysian carrier, said the report.

Under the Philippine Constitution, foreigners cannot own more than 40 percent of certain industries like transportation, real estate and utilities in order to protect public interest. But AirAsia has a local affiliate that is majority-owned by Filipinos.