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Business

Wins appeal against Competition Commission's ruling on fine

KUALA LUMPUR (NewsRise) -- AirAsia and Malaysia Airlines won their appeals against a 10 million ringgit ($2.4 million) fine on each airline for breaching the country's competition law.

     The Malaysian Competition Commission had fined the carriers in 2014 for violating competition rules following a share swap agreement between AirAsia, Asia's largest discount carrier by fleet, and flag carrier Malaysia Airlines that later fell through.

     On Thursday, a five-member tribunal led by Hasnah Mohamed Hashim unanimously agreed to set aside the fine against both the airlines. The reason for the decision will be later announced in a written judgement.

     "We think the competition appeal tribunal has reached the correct decision today," AirAsia's legal counsel Amir Faezal Zakaria told reporters outside the Kuala Lumpur High Court following the verdict.

     "It is the right decision for the airline industry as well, because there are many collaborations and alliances [among] airlines that take place all the time in our industry," he added.

     A lawyer representing Malaysia Airlines, which was de-listed from the Malaysian stock exchange in December 2014, declined to comment outside the court. Meanwhile, the Malaysian Competition Commission will study the latest decision and consider all its options before making the next move, said a legal counsel for the organisation.

     Malaysia Airlines and AirAsia had signed a share-swap agreement in 2011 in a bid to ease rivalry and cut costs in a cutthroat industry plagued by price wars and high fuel prices back then.

     However, strong opposition from Malaysia Airlines' various unions, who feared job losses, forced the government to unwind the pact after eight months of signing.

     Shares of AirAsia rose 1.45% to end Thursday at 1.40 ringgit following the verdict, in line with the benchmark FTSE Bursa Malaysia KLCI's 1.44% gain.

     In a separate development, AirAsia said it will raise its stake in an associate company, which manages its loyalty program by buying 25.8% stake in Think BIG Digital from shareholder Tune Money for 101.5 million ringgit.

     "AirAsia would have greater strategic control over day-to-day operations at Think BIG to drive the business forward," the company said. The deal would also allow AirAsia "to extract greater value" from its loyalty programme, it added.

     The proposed acquisition will raise AirAsia's holdings in Think BIG, which has 15.6 million members across Asia, to 71.9%, the company said in an exchange filing. However, some analysts worry that the deal would weigh on AirAsia's earnings.

     "We are relatively negative on the acquisition, given the high prices offered for a company that is loss making and may exert drag to AirAsia's earnings in the near term," said Hong Leong Investment Bank analyst Daniel Wong.

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