AirAsia enters restaurant enterprise, hopes to develop into life-style model

KUALA LUMPUR (Nikkei Markets) — Malaysia’s AirAsia Group plans to aggressively increase into the restaurant enterprise as the largest finances provider by fleet in Southeast Asia is aiming to show itself into a life-style model, its group chief govt stated on Monday.

AirAsia goals to open 5 eating places and franchise 100 cafes over the subsequent three to 5 years globally, stated Group CEO Tony Fernandes. The corporate plans to open shops in China quickly by way of franchisees and has acquired a proposal for a grasp franchise in Australia, he stated.

“We can’t be a lifestyle brand without food,” Fernandes stated at a information convention following the launch of the corporate’s first fast-food restaurant. “Our airline food has been successful. [We are] the first airline ever to commercialize food.”

The corporate will park the most recent undertaking underneath RedBeat Ventures, which holds AirAsia’s non-airline companies that additionally embody logistics, monetary expertise, and loyalty program.

A lot of the non-airline models are within the pink, besides logistics arm Teleport that recorded a small working revenue of 62.12 million ringgit ($14.9 million). All in all, these companies additionally accounted for lower than 6% of AirAsia’s complete income in the course of the quarter ended September.

“There is potential for non-airline digital businesses to overtake the airline business within the AirAsia Group,” stated Redbeat Ventures President Aireen Omar. “It could easily be a couple of years down the road for them to becoming more substantial as they grow their presence around the region.”

Other than the important thing market of Southeast Asia, AirAsia is eyeing the enlargement of its restaurant enterprise to London and New York, Fernandes added.

AirAsia’s newest enterprise comes as carriers grapple with fierce competitors at a time of overcapacity available in the market and tender passenger demand. That has partly pressured AirAsia to rein in regional enlargement, promote a few of its holdings, and shift into an asset-light mannequin within the longer run.

“AirAsia will be able to capitalize on its brand which has become known in the Southeast Asia region,” stated Maybank Funding Financial institution’s analyst Mohshin Aziz. “They will need to be good at branding and focus on operational efficiency.”

Shares of AirAsia have declined greater than 15% on Bursa Malaysia to date this yr with many analysts, together with Maybank’s Mohshin and CIMB Funding Financial institution Raymond Yap, at the moment score the inventory a “sell.”

The corporate swung to a lack of 51.44 million ringgit within the newest quarter ended September largely as a result of accounting losses. The identical quarter in 2018 had recorded a one-off achieve from the sale of investments in an affiliate firm.

Shares of AirAsia ended flat on Monday at 1.69 ringgit whereas the benchmark FTSE Bursa Malaysia KLCI was 0.6% greater.

— Yimie Yong

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