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AirAsia's Fernandes says company seeks more non-air acquisitions

COVID-hit budget carrier increasingly pins hopes on 'superapp' to diversify

AirAsia is increasingly betting on growth opportunities outside its core airline business.    © Reuters

KUALA LUMPUR -- Low-cost carrier AirAsia is looking at five more acquisitions to boost its non-airline business operations to counter its ailing core flight service, hit hard by the coronavirus pandemic, AirAsia Group CEO Tony Fernandes said Tuesday.

The acquisitions, to be announced in stages, will enable the company to fill in gaps that are standing in the way of its drive to become a key "superapp" provider and catch up to Southeast Asia's top players -- Singapore's Grab and Indonesia's Gojek

"I did tell [you] during our acquisition of Gojek Thailand that it's our first partnership and [there would be] more to come," Fernandes told a virtual news conference. "Watch that space," he added.

Gojek and AirAsia announced an all-share deal last month in which the Indonesian tech group took a 4.76% stake via newly issued shares in AirAsia's own superapp business in exchange for its Thai business. During that deal, AirAsia's superapp business was valued at around $1 billion.

Earlier this month, AirAsia's cargo and logistics arm, Teleport, purchased local online food delivery platform DeliverEat for $9.8 million.

Also on Tuesday, AirAsia announced the launch of its venture into the ride-hailing business in a direct challenge to Grab and Gojek as a key weapon to buffer its struggling core airline business, hit by countries forced to limit air travel and close borders due to the pandemic.

Fernandes said that the service-- AirAsia Ride -- will start off on roads but that the company is also "actively exploring drone and air taxi" concepts. The service is commencing in Malaysia's Klang Valley -- the country's economic growth center that includes the capital city Kuala Lumpur and the state of Selangor -- and is expected to be rolled out nationwide by the end of the year.

AirAsia's founder added that after a successful domestic rollout, the e-hailing business would be expanded in phases to Thailand, Indonesia, Singapore and the Philippines.

"It is not a zero-sum market," he said. "We will be very strong [compared to existing players] in airport and tourism markets."

Malaysia currently has over 40 ride-hailing license holders, but only half are actively operating. Grab remains the largest player in the market with a nationwide presence.

Currently the AirAsia super app can be used for air tickets, hotel reservations, financial services, parcel delivery and shopping for food, groceries and food and beauty products.

Fernandes said the app's grocery shopping function would position AirAsia as the region's largest online supermarket. He is also banking on the holiday-booking service, which he touted as possibly "better than Expedia and Traveloka."

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