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ANA Considers Ending AirAsia Tieup on Japan Discount Carrier

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June 10 (Bloomberg) -- ANA Holdings Inc., which owns a majority stake in a Japanese discount carrier set up in partnership with AirAsia Bhd., said it is considering dissolving the tie-up as it aims to improve sales at the unit.

Ending the partnership in the venture, AirAsia Japan Co., is one option and no final decision has been made, Megumi Tezuka, a spokeswoman for Tokyo-based ANA, said by phone today. AirAsia Group chief Executive Officer Tony Fernandes said by e-mail that he would comment “in due course.”

ANA would continue operating the business as a low-cost carrier from Narita airport even if the partnership with AirAsia is dissolved, Tezuka said. AirAsia Japan has struggled to fill as many seats as low-cost carriers Peach Aviation Ltd., partly owned by ANA, and Jetstar Japan Co., which also began flights in Japan last year.

“ANA should be able to turn around the carrier,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “They’ve already shown they can be successful with Peach. AirAsia may have discovered the difficulties of flying from Narita,” rather than Japan’s downtown Haneda airport, he said.

The Nikkei newspaper reported earlier today that ANA will acquire AirAsia’s stake in AirAsia Japan, without saying where it got the information.

33 Percent Stake

ANA, which owns 67 percent of AirAsia Japan, may buy out AirAsia’s stake in the venture, Tezuka said.

Narita, Japan-based AirAsia Japan filled 67.6 percent of seats on its domestic flights during Japan’s Golden Week holiday period from April 26 to May 6, the company said in a statement last month. In comparison Peach, which flies from Kansai airport in Osaka, Japan, filled 91.3 percent of its domestic seats, according to the company.

Jetstar Japan, which only flies within the country and is also based in Narita, filled 78.8 percent of seats, according to the company.

ANA has said that it aims to fill 80 percent or more of its seats on low-cost carrier operations.

AirAsia Japan, which began operations in August, has five domestic services and also flies to Seoul and Busan in South Korea. The carrier will add flights to Taiwan next month and is considering another overseas flight before the end of March as it more than doubles its fleet to nine planes from four, Yoshinori Odagiri, chief executive officer of the carrier, said last week.

ANA rose 3.6 percent to 204 yen at the close of trading in Tokyo and is up 13 percent this year. AirAsia, based in Sepang Selangor, Malaysia, rose 0.6 percent to close at 3.35 ringgit in Kuala Lumpur.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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