AirAsia to cut ties with Japan's ANA due to slump in business

TOKYO (AFP) - Asia's largest budget carrier AirAsia is to pull out of its partnership with Japan's All Nippon Airways because of slumping business, a report said on Monday.

Malaysia-based AirAsia has decided to withdraw from AirAsia Japan, a company it jointly formed with ANA to begin low-cost carrier operations out of Tokyo's Narita International Airport in August 2012, the Nikkei business daily said.

AirAsia's CEO Tony Fernandes reached a basic accord on the dissolution after discussions with senior officials of ANA Holdings, which owns ANA, the newspaper said.

Under their accord, the Japanese airline plans to buy the 49 percent stake held by its Malaysian counterpart and turn the joint venture into a 100 percent subsidiary, it said.

AirAsia aims to establish a new budget airline operator in partnership with another Japanese company, the paper said.

The airline's Japan's service is likely to continue under the Peach Aviation brand when AirAsia Japan's service finishes at the end of October, it said.

Peach Aviation is an ANA group budget carrier based at Kansai International Airport, western Japan.

An ANA spokesman said: "Nothing has been decided, but no matter what happens, we are determined to maintain the current LCC (Low-cost carrier) operations at Narita airport."

Shares in ANA rose 3.55 percent to 204 yen on the Tokyo Stock Exchange on Monday as the benchmark Nikkei index closed up 4.94 percent on the back of a weaker yen and better-than-expected US jobs data.