AirAsia’s deals with Airbus in focus as CEO steps aside

Bloomberg

Airbus SE and AirAsia Bhd, the discount airline built by Tony Fernandes, were inseparable for years, with the boisterous aviation executive gorging on
ever-larger aircraft orders to become the manufacturer’s single biggest customer for single-aisle jets. That happy marriage ended in acrimony last week after Airbus admitted to illegally trying to sway decision makers in aircraft sales and agreed to a record $4 billion bribery settlement. Fernandes stepped away from the Malaysian airline he had acquired in 2001 and turned into one of the best-known brands in Asian aviation.
Fernandes, 55, was one of Airbus’s most loyal customers, a fixture at air shows where he would make a splash with massive orders. He was also a poster-boy entrepreneur who bucked the stodgy formalities of traditional business.
Among his most memorable moments was in 2014, when he signed Airbus’s biggest deal at that year’s Farnborough expo and proceeded to exchange man-hugs with the European company’s legendary, since departed sales chief, John Leahy.
Now the corruption probe which has ricocheted through Airbus for almost four years, and already claimed the scalps of many of its senior staff, is coming for its airline counterparts. Fernandes will leave his role as chief executive officer of AirAsia for two months while the government probes corruption allegations, according to
a statement.
Chairman Kamarudin Meranun also stepped down, in a growing sign of further repercussions from the long-running bribery case.
Fernandes, who is already facing corruption charges in India, and Meranun denied allegations of wrongdoing but made the move to ensure a full and independent investigation, according to a statement.
“AirAsia is clearly a major Airbus customer,” said Sash Tusa, an aerospace and defense analyst at Agency Partners in London. “If there has been any impropriety it gives the AirAsia board much greater leverage to reconsider or change those orders.”
After starting his career in Richard Branson’s Virgin Group in the UK, Fernandes returned home to Malaysia and teamed up with Meranun to buy an ailing and indebted AirAsia for 1 ringgit in 2001.
Affable and almost always casually dressed, Fernandes was rarely seen without a grin and a red baseball cap bearing the AirAsia logo. Like Branson before him, he was never shy of the limelight.
AirAsia would become Malaysia’s first low-cost carrier and its explosive growth across the continent coincided with unprecedented demand for air travel in developing nations.

Asian ‘Apprentice’
Fernandes then ventured into other businesses including hotels, insurance, telecommunications and motor racing. In 2011, he took control of the Queens Park Rangers soccer club in the UK. Two years later, he hosted an Asian version of The Apprentice reality show.
On February 3, AirAsia’s shares tumbled 10% as Malaysian authorities launched their own investigation into the airline following the allegations emerging from Airbus’s settlement. Prosecutors at the UK‘s Serious Fraud Office said Airbus paid $50 million in sponsorship to a sports team jointly owned by two AirAsia executives as a reward for an order of 180 aircraft, later amended to 135.
The July 2014 deal in Farnborough that produced such fraternal bonhomie — for 50 A330-family widebodies — was supposed to trigger an additional $55 million payment, according to the prosecutors, though the money was never received.