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AirAsia Berhad ("AirAsia" Or "The Company") - Air Cargo Transportation Services Agreement With Leisure Cargo GMBH

BackJun 05, 2007

Type

Announcement
Subject AIRASIA BERHAD ("AIRASIA" or "the Company")
- Air Cargo Transportation Services Agreement with Leisure Cargo GmbH

Contents :

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      • AirAsia is pleased to announce that it has entered into an air cargo transportation services agreement with Leisure Cargo GmbH ("Leisure Cargo"), for Leisure Cargo to provide air cargo capacity management on AirAsia’s list of growing regional route network.

        DETAILS OF THE AGREEMENT
        AirAsia is to provide Leisure Cargo with 80% of available cargo capacity on AirAsia’s regional routes into and out of Kuala Lumpur International Airport’s Low Cost Carrier Terminal. The contract will take retrospective effect from 1 May 2007, the duration shall be for one year, with an option to renew for an additional year.

        The first part of the contract (“Mobilization Period”) commenced on 1 May 2007 and will expire on 30 June 2007. During the Mobilization Period, Leisure Cargo will pay AirAsia in the amount of RM200,000 (Ringgit Malaysia Two Hundred Thousand), OR a revenue sharing in the ratio of 80:20 in favour of AirAsia, whichever is the higher.

        The second part of the contract will commence on 1 July 2007 and expires on 30 April 2008. Leisure Cargo agrees to a monthly guaranteed payment of RM1,000,000 (Ringgit Malaysia One Million) per month, OR a revenue sharing in the ratio of 60:40 in favour of AirAsia, whichever is the higher.

        RATIONALE FOR ENTERING INTO AGREEMENT
        The Company's fleet of Airbus A320 and Boeing 737-300 aircraft is equipped with a dedicated belly space for cargo. Cargo handling and distribution is in the ordinary course of the Company’s business. Under this agreement, Leisure Cargo will manage AirAsia’s regional cargo by maximizing space, feeding cargo bookings for all flights and allot block space for higher yield service. With this arrangement, the Company is looking forward to increase cargo load volumes and generate more revenue as we set out to become the single largest Airbus A320 operator in Asia.

        FINANCIAL EFFECT OF THE AIR CARGO AGREEMENT
        The Air Cargo Agreement will not have a material and adverse effect on the net income, net tangible assets, issued paid-up share capital of AirAsia for financial year 2007. But it is expected to contribute positively for the future consolidated earnings of AirAsia.

        DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
        None of the directors and/or major shareholders of the Company, and persons connected to them (insofar as the existing directors and major shareholders are able to ascertain and are aware), has any interest, direct or indirect, in the above-mentioned agreement.

        BACKGROUND INFORMATION ON LEISURE CARGO GMBH
        In 1990, LTU, a renowned German holiday airline, founded in 1955, started to add cargo to its product line. LTU gradually expanded its intercontinental network during the 1990’s and offered this business model to other carriers with a similar structure. Leisure Cargo GmbH went into operation on 1 January 2000, having access to the belly capacities of then 6 European airlines serving the Mediterranean and selected intercontinental destinations. Since then Leisure Cargo has not only been profitable throughout the 6 years but the 17 European, Asian and American airlines under the umbrella also enjoyed respectable additional income, at close to zero cost. Leisure Cargo is serving 225 locations with 290 aircraft of the mandate-carriers.

      This announcement is dated 5 June, 2007.
 

Announcement Info

Company Name AIRASIA BERHAD  
Stock Name AIRASIA    
Date Announced 5 Jun 2007  
Category General Announcement
Reference No CM-070605-59566