Description
When AirAsia started out as a low-cost airline in 2002, we pledged to make air travel affordable for everybody. Today, nine years down our corporate journey.
A
i
r
A
s
i
a
B
e
r
h
a
d
(
2
8
4
6
6
9
-
W
)
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
0
Annual Report 2010
welcome
on board.
AIRASIA BERHAD
ANNUAL REPORT 2010
FACTS AT A GLANCE
>
Group Revenue
RM3.95 bil
>
Pro?t After Tax
RM1.06 bil
>
Total Assets
RM13.24 bil
A PROMISE MADE,
A PLEDGE KEPT
WHEN AIRASIA STARTED OUT AS A LOW-COST AIRLINE IN 2002, WE PLEDGED TO
MAKE AIR TRAVEL AFFORDABLE FOR EVERYBODY. TODAY, NINE YEARS DOWN
OUR CORPORATE JOURNEY, WE KNOW WE HAVE KEPT TO OUR INITIAL PROMISE.
In October 2010, we ?ew our 100 millionth guest, a young, newly married Indonesian housewife who was going to
visit her husband working in India. Just as we made her travel dream come true, we are delighted to have done the
same for more than 100 million guests.
We have kept our fares down thanks to our disciplined focus on keeping our operating costs the lowest among the
world’s airlines. We offer a million free tickets every year. While enabling everyone to ?y, we are also connecting
people to places that were never connected by air before. We have achieved our Vision of being the largest low-cost
airline in Asia, serving those who previously had no access nor the means to enjoy air travel. We have done this by
staying close to our Mission of:
• being the best company to work for, treating each Allstar as a member of our extended AirAsia family
• creating a globally recognised ASEAN brand
• maintaining the highest quality product, embracing technology to reduce costs and enhance service levels
Central to our promise is our great team of Allstars who have proven time and again that hard work, creativity,
passion and a commitment to excellence are what it takes to be not just good, but great. These traits of our
Allstars, combined with our ?ve core values of Safety, Passion, Integrity, Caring and Fun, have kept AirAsia growing
from strength to strength. They have made us the World’s Best Low Cost Airline, as vouchsafed by 18 million
travellers polled by London-based consultancy Skytrax.
This is an award that is close to our heart because it validates the value of our promise. Now everyone can ?y.
WHAT’S
INSIDE?
>
CONTENTS
Business Review
78 Connecting ASEAN and Beyond
84 Thailand – Celebrating a New All-A320 Fleet
90 Indonesia – Truly International Airline
96 AirAsia X – The Sky’s the Limit
100 The Social Network
102 A Lifestyle Brand
Key Initiatives
106 Our Guests are our Priority
109 Allstars, Every Single One
114 Our Safety Commitment
118 An Airline With a Giant Heart
Accountability
124 Statement on Corporate Governance
131 Audit Committee Report
135 Statement on Internal Control
137 Additional Compliance Information
138 Financial Statements
Other Information
220 Analysis of Shareholdings
222 List of Top 30 Shareholders
223 List of Properties Held
224 Group Directory
226 Glossary
Form of Proxy
06 Notice of Annual General Meeting
08 Statement Accompanying the Notice of
Annual General Meeting
11 Financial & Investor Calendar
Corporate Framework
12 Corporate Information
16 How We’ve Conquered the ASEAN Sky
18 Milestones Over a Decade
24 AirAsia Group
26 Awards & Accolades 2010
28 Past Awards
30 Media Highlights in 2010
Performance Review
32 Group Financial Highlights
34 Balance Sheets
35 Share Performance
Leadership
40 Board of Directors
42 Directors’ Pro?le
48 Senior Management
Perspective
58 Chairman’s Statement
64 Group CEO’s Report
“ This is a fantastic
achievement for AirAsia
to be here collecting
the award as the
World’s Best Airline
for the second year
running. They are clearly
meeting and exceeding
their customers’
expectations to have
been named winner of
this outstanding global
recognition. ”
Mr Edward Plaisted
Skytrax Chairman
The World’s
Best Low Cost
Airline 2010
now everyone can fy
NOTICE OF
ANNUAL GENERAL
MEETING
NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meeting of AirAsia Berhad (284669-W)
(“AirAsia” or “the Company”) will be held at AirAsia Academy, Lot PT25B, Jalan KLIA S5, Southern
Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan, Malaysia on
Monday, 20 June 2011 at 10.00 a.m. for the following purposes:-
AS ORDINARY BUSINESS
1. To receive and consider the Audited Financial Statements together with the Reports of the Directors and Auditors
thereon for the ?nancial year ended 31 December 2010.
2. To declare a First and Final Dividend of 30% or 3 sen per ordinary share of RM0.10 for the ?nancial year ended
31 December 2010 comprising as follows:-
(i) Gross Dividend of 9.1% per ordinary share of RM0.10 less Malaysian Income Tax at 25%;
(ii) Tax Exempt Dividend of 0.2% per ordinary share of RM0.10; and
(iii) Single Tier Dividend of 20.7% per ordinary share of RM0.10.
3. To approve Directors’ Fees of RM2,203,000 for the ?nancial year ended 31 December 2010.
4. To re-elect the following Director who retires pursuant to Article 124 of the Company’s Articles of Association:
a) Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
5. To re-elect the following Director who retires pursuant to Article 130 of the Company’s Articles of Association:
a) En. Mohd Omar bin Mustapha
6. To consider and, if thought ?t, pass the following resolution pursuant to Section 129 of the Companies Act, 1965:
“THAT Dato’ Leong Sonny @ Leong Khee Seong, retiring in accordance with Section 129 of the Companies Act, 1965,
be and is hereby re-appointed as a Director of the Company to hold of?ce until the next Annual General Meeting.”
7. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors to ?x their
remuneration.
AS SPECIAL BUSINESS
To consider and if thought ?t, to pass, with or without modi?cations, the following Resolution:
8. ORDINARY RESOLUTION
AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approval of relevant authorities,
the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms
and conditions and for such purposes as the Directors may, in their absolute discretion, deem ?t provided that the
aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of
the Company for the time being and that the Directors be and also empowered to obtain approval for the listing of and
quotation for the additional shares so issued on the Main Market of Bursa Malaysia Securities Berhad AND THAT such
authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”
OTHER ORDINARY BUSINESS
9. To transact any other business of which due notice shall have been given.
NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE
NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Eighteenth Annual General Meeting
of the Company to be held on Monday, 20 June 2011, a First and Final Dividend of 30% of 3 sen per ordinary share of
RM0.10 for the ?nancial year ended 31 December 2010 will be paid on Tuesday, 19 July 2011 to depositors whose names
appear in the Record of Depositors on Monday, 20 June 2011. A depositor shall qualify for entitlement to the dividend only in
respect of:-
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
(Resolution 7)
(Resolution 8)
PAGE >
6
AIRASIA BERHAD
ANNUAL REPORT
2010
(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on Monday, 20 June 2011, in respect of ordinary transfers; and
(b) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.
BY ORDER OF THE BOARD
JASMINDAR KAUR A/P SARBAN SINGH
(MAICSA 7002687)
Company Secretary
Selangor Darul Ehsan
27 May 2011
NOTES ON APPOINTMENT OF PROXY
a. Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Article 43(1) of the Company’s
Articles of Association, only those Foreigners (as de?ned in the Articles) who hold shares up to the current prescribed foreign ownership
limit of 45.0% of the total issued and paid-up capital, on a ?rst-in-time basis based on the Record of Depositors to be used for the
forthcoming Annual General Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not entitled to vote, will similarly not be
entitled to vote. Consequently, all such disenfranchised voting rights shall be automatically vested in the Chairman of the forthcoming
Annual General Meeting.
b. A member entitled to attend and vote is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative), to
attend and vote in his stead. A proxy need not be a member of the Company.
c. The Proxy Form in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either
under its common seal or under the hand of an of?cer or attorney duly authorised.
d. Where a member appoints two proxies, the appointment shall be invalid unless he speci?es the proportion of his shareholdings to be
represented by each proxy.
e. Where a member of the Company is an authorised nominee as de?ned under the Securities Industry (Central Depositories) Act, 1991,
it may appoint at least one but not more than two (2) proxies in respect of each securities account it holds to which ordinary shares in
the Company are credited.
f. The Proxy Form or other instruments of appointment shall not be treated as valid unless deposited at the Registered Of?ce of the
Company at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-
eight (48) hours before the time set for holding the meeting. Faxed copies of the duly executed form of proxy are not acceptable.
EXPLANATORY NOTES:
1. Authority to allot shares pursuant to Section 132D of the Companies Act, 1965 (Resolution 8)
Ordinary Resolution 8 has been proposed for the purpose of renewing the general mandate for issuance of shares by the Company
under Section 132D of the Companies Act, 1965 (hereinafter referred to as the “General Mandate”). Ordinary Resolution 8, if passed,
will give the Directors of the Company authority to issue ordinary shares in the Company at their discretion without having to ?rst
convene another General Meeting. The General Mandate will, unless revoked or varied by the Company in a General Meeting, expire
at the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting is
required by law to be held, whichever is earlier.
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the
Seventeenth Annual General Meeting held on 24 June 2010 which will lapse at the conclusion of the Eighteenth Annual General Meeting.
The General Mandate, if granted, will enable the Company to ful?ll its obligations under the Company’s Employees’ Share Option
Scheme in an expedient manner as well as provide ?exibility to the Company for any future fund raising activities, including but not
limited to further placing of shares for the purposes of funding future investment project(s), repayment of bank borrowing, working
capital and/or acquisition(s) and thereby reducing administrative time and costs associated with the convening of additional
shareholders meeting(s).
2. Datuk Alias bin Ali who retires pursuant to Article 124 of the Company’s Articles of Association, will not be seeking for re-election at the
forthcoming Annual General Meeting of the Company and therefore shall retire at the conclusion of the said Annual General Meeting.
PAGE >
7
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTOR STANDING FOR RE-APPOINTMENT AT THE EIGHTEENTH ANNUAL GENERAL MEETING OF
THE COMPANY
The Independent Non-Executive Director who is standing for re-appointment at the Eighteenth Annual
General Meeting is as follow:
a) Pursuant to Section 129 of the Companies Act, 1965:
i) Dato’ Leong Sonny @ Leong Khee Seong
The details of the above Director standing for re-appointment are set out in the Pro?le of Directors from
pages 42 to 47 of this Annual Report.
STATEMENT
ACCOMPANYING THE
NOTICE OF ANNUAL
GENERAL MEETING
FOR THE YEAR ENDED 31 DECEMBER 2010
PAGE >
8
AIRASIA BERHAD
ANNUAL REPORT
2010
Over 150 Years
of Looking to the Future.
Your Future.
Credit Suisse. Helping you to take the next step.
credit-suisse.com
8422 }n, |u;omon;y Pu;ud;p¦u), 2) ) 20)).4.2) ¯÷ 0,·,0·)0
? 25-27 January 2010
AirAsia’s participation in BNP
Paribas Securities Asia –
ASEAN Conference, Singapore
? 27 March 2010
AirAsia’s participation in Invest
Malaysia, Kuala Lumpur
? 18 August 2010
Announcement of the
unaudited results for the 2nd
quarter ended 30 June 2010
? 4 February 2010
AirAsia’s participation in
Raymond James Growth Airline
Conference, New York
? 31 May 2010
Announcement of the
unaudited results for the 1st
quarter ended 31 March 2010
? 13-17 September 2010
AirAsia’s participation in CLSA
Investor’s Forum, Hong Kong
? 25 February 2010
Announcement of the
unaudited results for the 4th
quarter and full year ended
31 December 2009
? 24 June 2010
17th Annual General Meeting
of the Company
? 21 October 2010
AirAsia’s participation in Invest
Malaysia, Hong Kong
? 23 March 2010
AirAsia’s participation in Credit
Suisse Asian Investment
Conference, Hong Kong
? 30 June - 2 July 2010
AirAsia’s participation in Invest
Malaysia, Europe (London,
Paris, Edinburgh)
FINANCIAL
& INVESTOR
CALENDAR
? 25 November 2010
Announcement of the
unaudited results for the
3rd quarter ended 30
September 2010
? 8 December 2010
AirAsia’s participation in
Macquarie Asia Pacifc
Infrastructure and
Transportation Conference
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
11
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Non-Independent Non-Executive Chairman
Dato’ Sri Dr. Anthony Francis Fernandes
(commonly known as
Dato’ Sri Dr. Tony Fernandes)
Group Chief Executive Of?cer
Dato’ Kamarudin bin Meranun
Deputy Group Chief Executive Of?cer
Conor Mc Carthy
Non-Independent Non-Executive Director
Dato’ Leong Sonny @ Leong Khee Seong
Independent Non-Executive Director
Dato’ Fam Lee Ee
Independent Non-Executive Director
Datuk Alias bin Ali
Independent Non-Executive Director
Dato’ Mohamed Khadar bin Merican
Independent Non-Executive Director
En. Mohd Omar bin Mustapha
Independent Non-Executive Director
AUDIT COMMITTEE
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
Datuk Alias bin Ali
Dato’ Mohamed Khadar bin Merican
REMUNERATION COMMITTEE
Datuk Alias bin Ali
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
NOMINATION COMMITTEE
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Datuk Alias bin Ali
Dato’ Fam Lee Ee
SAFETY REVIEW BOARD
Conor Mc Carthy
Dato’ Mohamed Khadar bin Merican
COMPANY SECRETARY
Jasmindar Kaur A/P Sarban Singh
(Maicsa 7002687)
AUDITORS
PricewaterhouseCoopers
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
50706 Kuala Lumpur, Wilayah Persekutuan
Malaysia
Tel : (603) - 21731188
Fax: (603) - 21731288
REGISTERED OFFICE
AirAsia Berhad (Company No. 284669-W)
25-5, Block H, Jalan PJU 1/37
Dataran Prima, 47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Tel : (603) - 78809318
Fax: (603) - 78806318
E-mail : [email protected]
Website : www.airasia.com
PAGE >
12
AIRASIA BERHAD
ANNUAL REPORT
2010
HEAD OFFICE
LCC Terminal, Jalan KLIA S3
Southern Support Zone, KLIA
64000 Sepang,
Selangor Darul Ehsan, Malaysia
Tel : (603) - 86604333
Fax: (603) - 87751100
SHARE REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Tel : (603) - 78418000
Fax: (603) - 78418008
SOLICITORS
Messrs Logan Sabapathy & Co.
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
(Listed since 22 November 2004)
(Stock code: 5099)
PAGE >
13
AIRASIA BERHAD
ANNUAL REPORT
2010
“ The AirAsia route map
has so many exciting
destinations that it is
almost impossible to
choose a favourite.
I’ve seen some of the
world’s greatest temples,
beaches, historical
and cultural sites.
I’ve met some of the
most beautiful people
imaginable along the way
which is always a travel
highlight in itself. ”
Exploring
ASEAN
David
Australia
now everyone can fy
AIRASIA NEEDS NO INTRODUCTION IN ASEAN, WHERE IT IS THE LEADING LOW-COST
CARRIER, CONNECTING PEOPLE AND PLACES ACROSS 132 ROUTES, 40 OF WHICH ARE
OFFERED BY NO OTHER AIRLINE. IN 2010, THE GROUP, WHICH INCLUDES AFFILIATES
AIRASIA THAILAND AND AIRASIA INDONESIA, REINFORCED ITS LEADERSHIP POSITION
WITH TWO REMARKABLE MILESTONES: FLYING ITS 100 MILLIONTH GUEST AND
BREAKING THE RM1 BILLION PROFIT BARRIER.
HOW WE’VE
CONQUERED
THE ASEAN SKY
From an airline with two aircraft
plying six routes in Malaysia
in January 2002, AirAsia has
soared in the last nine years
to cover 65 destinations in 18
countries. Today, employing
more than 8,000 staff and with
a market capitalisation of just
over RM7.06 billion (as at 31
December 2010), it is the only
Truly ASEAN airline, serving the
region’s 600 million population
from 10 hubs in three countries
- Kuala Lumpur, Kuching, Penang
and Kota Kinabalu in Malaysia;
Bangkok and Phuket in Thailand;
and Jakarta, Bali, Bandung and
Surabaya in Indonesia.
In 2011, we introduced two
hubs, Chiang Mai for AirAsia
Thailand and Medan for AirAsia
Indonesia.
Singapore functions as a virtual
hub where AirAsia features
among the top 10 airlines
in terms of contribution to
passenger traf?c. Further
strengthening its ASEAN
network, the Group in December
2010 signed an agreement to
establish a Philippine-based low-
cost af?liate, which is expected
to be operational by end 2011.
The quest to democratise air
travel began when Tune Air
Sdn. Bhd. – founded in 2001
by Dato’ Sri Dr. Tony Fernandes,
Dato’ Pahamin Ab. Rajab, Dato’
Kamarudin Meranun and Dato’
Aziz Bakar - bought over the loss-
making, debt-riddled AirAsia from
HICOM Holdings Berhad (now
DRB-HICOM Berhad) for a token
sum of RM1. The enterprising
group quickly settled the airline’s
debts and set about rebranding
and relaunching AirAsia as a low-
fare carrier.
The Group’s entire business
model centres around a low-cost
philosophy which requires its
operations to be lean, simple
and ef?cient. Several key
strategies have been employed
towards this effect, including:
• High Aircraft Utilisation
AirAsia focuses on high
frequency and high
turnaround of ?ights, both
of which add to customer
convenience and greater
cost ef?ciencies. Its
turnaround of 25 minutes is
the fastest in the region.
FACTS AT A GLANCE
>
Incorporated in
2001
>
No. of Destinations
65
in 18 countries
>
No. of Employees
8119
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
16
• Low Fare, No Frills - This
means no frequent fyer
miles or airport lounges in
exchange for lower fares.
Guests have the choice of
paying for in-?ight meals,
snacks and drinks.
• Point to Point Network
All short-haul AirAsia ?ights
(four-hour ?ight radius or
less) and medium- to long-
haul AirAsia X ?ights are non-
stop, doing away with the
need for human resources,
physical infrastructure and
facilities at transit locations.
In addition, a decision was made
in December 2004 to convert
the existing ?eet of ageing
Boeing B737s with the higher
capacity yet more fuel-ef?cient,
reliable and cost-ef?cient Airbus
A320s. As a result, today, the
Group boasts the largest and
newest A320 ?eet in the region.
Of its 90 aircraft, 86 are A320s,
and the Group has in its order
book an additional 89 A320s to
be delivered. The four remaining
B737s in AirAsia Indonesia
are to be phased out by 2012,
following which there will be
less duplication of manpower
requirements and reduced need
to stock maintenance parts.
Collectively, these strategies
have established AirAsia as the
lowest-cost airline in the world,
with a cost/ASK (available seat
kilometre) of US3.67c. This
has been achieved without
compromising safety. The
highest priority is given to
safe operations, and AirAsia
complies with conditions as
set by regulators in all the
countries where it operates. The
Group also partners with the
most renowned maintenance
providers to ensure its ?eet is
always in the best condition.
Innovative use of technology
has played a key role in AirAsia’s
success story, beginning with
online booking. It was the ?rst
airline in Asia to go ticketless -
in March 2002 - allowing guests
to pay for their bookings by
credit card over the phone. Over
the years, it has built on its IT
platform to increase the ease of
customer transactions as well
as provide greater savings to the
Group. In 2010, AirAsia unveiled
its latest IT booking innovation
in the form of New Skies, which
allows customers to better
manage their online bookings.
With the advent of the social
media, tools such as Facebook,
Twitter and blogs have become
integral to the Group’s customer
relationship initiatives. AirAsia
is, in fact, recognised as the
most popular airline in the
region on Facebook in terms of
fan base.
The spirit of innovation is also
re?ected in AirAsia’s ?nancial
strategies. The company’s
spectacular turnaround within
18 months of operations sealed
the stamp of ?nancial wizardry
that has continued to help the
airline grow and win accolades
such as the 2010 Asiamoney’s
Best Managed Company.
While known for its no-frills
approach, AirAsia is also
synonymous with youthful energy
and a cheeky sense of fun, as
captured in its campaigns and
branding strategies. The airline
regularly sponsors sporting and
entertainment events, and in
2010 launched AirAsiaRedTix.
com, an online gateway to world-
class performances.
AirAsia is ultimately a people’s
airline. This is mirrored in
numerous acts of generosity
that show the management truly
cares. In January 2010, the
Group joined hands with UNICEF
to raise RM438 million (US$128
million) for relief efforts targeted
at Haitians affected by the
earthquake. The airline also
runs an on-going Donate Your
Loose Change campaign to help
needy heart patients receive
treatment at the National Heart
Institute in Kuala Lumpur.
The Group’s adherence to best
practices has been recognised
via numerous awards over the
years. Perhaps most notably
AirAsia has been voted the
World’s Best Low Cost Airline for
two consecutive years, in 2009
and 2010. This award, from
Skytrax, re?ects the opinions
of about 18 million travellers
worldwide who were polled
by the London-based aviation
consultant. AirAsia feels proud
of such endorsement and is
committed to living up to guests’
expectations by continuing to
keep costs down while providing
the highest levels of service
and ef?ciency as it spreads its
wings further and wider across
the skies.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
17
MILESTONES
OVER A DECADE
2001
8 September Tune Air Sdn.
Bhd. signs a Sales & Purchase
Agreement with DRB-Hicom for
the takeover of AirAsia.
8 December Tune Air Sdn. Bhd.
of?cially takes over AirAsia.
2002
January AirAsia is re-branded
and re-launched as Asia’s ?rst
low-cost carrier.
1 March AirAsia goes ticketless,
in line with its Easy to Call, Easy
to Pay and Easy to Fly approach,
which allows guests to pay for
their bookings by credit card
over the telephone.
13 July AirAsia launches a new
destination to Miri in Sarawak.
17 August AirAsia introduces
direct ?ights between Kuala
Lumpur and Tawau in Sabah.
2003
19 August AirAsia launches the
world’s ?rst airline SMS booking.
31 October AirAsia announces
the setting up of a new hub
in Senai, Johor Bahru, with
direct ?ights to Kota Kinabalu,
Kuching, Langkawi and Penang.
12 November AirAsia partners
with domestic entrepreneurs
in Thailand to establish AirAsia
Thailand.
8 December AirAsia launches its
?rst regional ?ight to Phuket.
18 December First AirAsia
?ight takes off from Senai,
Johor Bahru, heading for Miri in
Sarawak.
2004
16 February AirAsia Thailand
launches its ?rst international
?ight, linking Bangkok and
Singapore.
27 February AsiaAsia enters into
a strategic partnership with Pos
Malaysia to enable guests to
remit payments through any Pos
Malaysia branch nationwide.
11 April AirAsia launches its
service to Soekarno-Hatta
Airport, Jakarta, from the
airline’s hub in Senai, Johor
Bahru. It is the airline’s
?rst ?ight to an Indonesian
destination.
31 May AirAsia announces the
launch of the long-awaited direct
?ight to Jakarta from Kuala
Lumpur International Airport.
6 June AirAsia Thailand starts
services between Penang and
Bangkok.
2 July AirAsia’s direct ?ight
connecting Kuala Lumpur and
Jakarta gets off to a ?ying start,
with a full passenger load.
8 July AirAsia expands its
presence in Indonesia, linking
Malaysia to several key
Indonesian tourist destinations,
including Bali and Medan.
19 October AirAsia launches its
IPO Prospectus for the airline’s
proposed listing on the Main
Board of Bursa Malaysia.
2005
19 January AirAsia commences
service between Singapore and
Jakarta through its sister airline
AWAIR (now AirAsia Indonesia).
AirAsia has a 49% stake in
AWAIR, a privately owned
airline in Indonesia, which was
relaunched as a low-fare, no-
frills airline to serve domestic
and international routes out of
its hub at the Soekarno-Hatta
International Airport, Jakarta.
7 March AirAsia receives the
prestigious Market Leadership
Award at the 2005 Airline
Achievement Awards by Air
Transport World Magazine in
Washington, DC, USA.
22 July AirAsia announces a
one-year deal with Manchester
United under which it became
the football club’s Of?cial Low
Fare Airline.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
18
2005 - 2007
23 August AirAsia becomes the
?rst airline in the world to offer
a total, comprehensive booking
system targeting mobile phones
and wireless devices.
1 November AirAsia commences
daily ?ights from Kuala Lumpur
to Phnom Penh, Cambodia.
2 December AirAsia offers
two million free seats in
conjunction with its 4th
anniversary celebrations. The
ground-breaking campaign was
promoted in seven countries.
8 December AirAsia’s ?rst
Airbus A320 arrives at Kuala
Lumpur International Airport
from Toulouse, France.
27 December AirAsia introduces
direct ?ights from Kuala Lumpur
to Siem Reap, Cambodia.
2006
18 January AirAsia and Galileo
sign a global agreement for
exclusive access to low fares,
enabling AirAsia to reach and
serve an even larger and wider
network of markets.
22 April DYMM Seri Paduka
Baginda Yang Dipertuan Agong
XII, Tuanku Syed Sirajuddin (King
of Malaysia) visits AirAsia’s new
home at the LCC Terminal, Kuala
Lumpur International Airport,
and presents certi?cates to
graduates from the AirAsia cadet
pilot training programme.
31 May AirAsia dispatches an
extra ?ight from Kuala Lumpur
to Solo in Indonesia to aid
humanitarian and relief work
in Yogyakarta, Central Java,
following an earthquake in the
Indonesian city.
20 June AirAsia partners with
AIG S.E. Asia Pte. Ltd. to
become the ?rst low-fare airline
in Asia to offer a web-integrated
travel protection sales platform.
4 July AXN, a leading
international action and
adventure cable channel,
announces AirAsia’s
participation as the Of?cial
Airline Partner for the Asian
edition of the three-time Emmy
award-winning Amazing Race
reality series.
MILESTONES
OVER A DECADE
6 July AirAsia announces Kota
Kinabalu as its latest hub in
Malaysia.
20 July AirAsia establishes
another hub in East Malaysia in
Kuching, Sarawak.
14 August Airbus launches its
state-of-the-art Airbus A320
full ?ight simulators at the new
AirAsia Academy.
8 September AirAsia and
Manchester United extend their
partnership and bring in Tourism
Malaysia as a new co-sponsor.
4 October AirAsia makes its
entry into Vietnam with the
launch of daily ?ights from Kuala
Lumpur to Hanoi.
14 November AirAsia and
Amadeus, a global leader in
technology and distribution
solutions for the travel and
tourism industry, announce
an agreement under which
the airline aims to reach a
wider international market by
distributing and selling its seats
through the Amadeus system.
2007
5 April AirAsia announces its
partnership as Of?cial Airline
of the AT&T Williams’ F1 team
for three years with effect from
the 2007 Formula One World
Championship.
15 May AirAsia introduces a
new service, Xpress Boarding,
offering guests the opportunity
to be among the ?rst to board
and have the greatest choice of
seats.
4 August AirAsia announces the
enhancement of its amenities
to accommodate the needs of
disabled guests.
15 August AirAsia launches its
in-?ight magazine, Travel3Sixty.
5 December AirAsia places
the world’s largest order for
the Airbus A320, totaling 225
aircraft, making it the biggest
operator of the aircraft in the
world.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
19
17 June The airline introduces
AirAsia On-Time Guarantee
(OTG) entitling guests whose
?ights are delayed for more than
three hours to a RM200 AirAsia
e-gift voucher.
25 June AirAsia celebrates an
amazing achievement by hitting
the 50 million guests mark after
just six years in operation.
14 August AirAsia launches a
new route linking Pekanbaru in
Indonesia with Singapore.
26 September AirAsia
announces four additional daily
direct ?ights from Kuala Lumpur
to Singapore.
7 October AirAsia becomes
all-Airbus, with a ceremony to
mark the retirement of its ?nal
Boeing B737-300 aircraft from
its Malaysian operations.
23 October AirAsia announces
that beginning 1 November
2008, its On-Time Guarantee
(OTG) waiting time will be
reduced from three to two hours,
an indication of the airline’s
con?dence that an all-Airbus
?eet would improve reliability.
1 November AirAsia celebrates
its inaugural ?ight from Kota
Kinabalu to Singapore.
11 November AirAsia becomes
the ?rst airline in the world
to completely eliminate fuel
surcharges, despite the rising
price of oil.
14 November AirAsia receives
the PIKOM ICT Organisation
Excellence Award based on its
fast growing passenger volume
and use of ICT.
1 December AirAsia launches
its ?rst route to India, to
Tiruchirapalli (Trichy) in the
southern Indian state of Tamil
Nadu.
16 December AirAsia launches
a massive regional marketing
campaign as part of its initiative
to help revive Thailand’s tourism
industry following political
disturbances in the Land of
Smiles.
2008
11 January AirAsia launches
its Donate Your Loose Change
campaign jointly with the
National Heart Institute (IJN)
to raise funds for needy heart
patients.
16 January AirAsia launches its
maiden ?ight from Kuala Lumpur
to Guangzhou, China.
1 February AirAsia starts two
daily ?ights from Kuala Lumpur
to Singapore.
20 March AirAsia unveils the
world’s ?rst commercial A320
aircraft with a Formula One team
livery, that of the AT&T Williams
team, to mark the airline’s
extended three-year partnership
with the Formula One team.
9 May AirAsia extends
assistance to victims of
Cyclone Nargis in Myanmar
by sponsoring ?ights for aid
workers and transporting aid
materials.
10 June AirAsia celebrates
another proud achievement
by of?cially launching its
?nal domestic destination to
Kuantan, thus completing the
airline’s domestic expansion.
2008 - 2009
MILESTONES
OVER A DECADE
2009
12 January AirAsia implements
a simpler and convenient
new baggage policy dubbed
‘Supersize’, allowing guests
to choose from three tiers of
baggage sizes when purchasing
their ?ight seats online.
12 February AirAsia introduces
Pick A Seat, allowing guests to
designate their seat preference
on board the aircraft.
17 February AirAsia introduces
web check-in, a self check-in
facility across the entire AirAsia
Group network. With the new
innovation, guests are able
to save time on pre-departure
procedures.
2 March Over 50,000 seats on
AirAsia’s new routes between
Singapore and the Indonesian
cities of Jakarta, Bandung,
Yogyakarta and Bali were
snapped up by travellers at the
end of a six-day promotion in
conjunction with the routes’
maiden sale.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
20
6 July AirAsia expands its
route network from its Penang
hub with ?ights to Hong Kong,
AirAsia’s 6th international
service from Penang after
Singapore, Bangkok, Medan,
Jakarta and Macau.
9 July AirAsia launches Redbox
(now known as AirAsia Courier),
the world’s ?rst low-cost courier
service, offering the best value-
for-money shipment option in
Malaysia.
17 July AirAsia Indonesia
announces the launch of a
new route linking Bali to Perth,
Australia. The route proves
so popular that the airline
subsequently increases its
frequency to four daily fights.
8 August AirAsia marks
the 42nd ASEAN Day with a
celebration that involved an
AirAsia aircraft bearing a ‘Truly
ASEAN’ livery transporting
more than 100 of?cials,
media, academics and NGO
representatives led by ASEAN
Secretary-General Dr Surin
Pitsuwan to three cities in one
day – Jakarta, Kuala Lumpur and
Bangkok.
19 August AirAsia continues
to strengthen its ASEAN
connectivity by increasing its
fight frequency to Vietnam
through AirAsia Indonesia with a
new ?ight linking Jakarta and Ho
Chi Minh City.
9 October AirAsia signs up as
the of?cial airline partner of
the ?edgling ASEAN Basketball
League.
12 October AirAsia launches a
regional effort to position the
world’s best low-cost airline as
a high quality, sleek and cool
brand with a Have You Flown
AirAsia? campaign.
13 November AirAsia sets a new
world record with its 1 Million
Free Seats Campaign launched
on 11 November, and breaks
it the very next day. Navitaire,
its host reservation provider
that powers booking engines to
many airlines around the world,
announces that AirAsia set a
new international sales record
with 402,222 seats snapped up
in the 24-hour period after the
campaign was launched.
7 December AirAsia caps its
8th anniversary celebrations
by becoming the most popular
airline in the world on giant
social networking site Facebook,
surpassing all other airlines
– even all other transport
companies – in terms of fan
numbers.
1 April AirAsia is named the
World’s Best Low Cost Airline
by London-based aviation
consultancy Skytrax based on
its Annual World Airline Survey,
which polled more than 16
million air travellers.
28 April AirAsia partners
with Scicom (MSC) Berhad to
establish a world-class, state-of-
the-art contact centre to service
the low- cost carrier’s guests
from all around the world.
12 May AirAsia gives away one
million free seats, setting yet
another benchmark in corporate
social responsibility.
1 June AirAsia of?cially
celebrates its newest
international route from Penang,
the Pearl of the Orient, to
Singapore, the Lion City.
24 June AirAsia abolishes the
administration fee from its fare
structure to further stimulate
travel and tourism in Malaysia
and the region.
2 July AirAsia launches another
international route from Kota
Kinabalu to Brunei to boost its
East Malaysia connectivity. The
new service is the airline’s 6th
international service from Kota
Kinabalu.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
21
2010
20 January AirAsia introduces
its Self Check-In service,
providing guests with a quicker
and more convenient way of
checking in.
22 January AirAsia joins hands
with UNICEF and helps channel
RM438 million (US$128 million)
towards helping children and
families in Haiti as part of
UNICEF’s 2010 Haiti Earthquake
Children’s Appeal.
26 January AirAsia and AirAsia X
launch direct ?ights to six new
destinations in India in the ?rst
quarter of 2010. Five of the
?ights were from Kuala Lumpur
to key metro cities of Chennai,
Bangalore, Hyderabad, Mumbai
and New Delhi and one from
Penang to Chennai.
10 February AirAsia becomes
the title sponsor of the 2010
AirAsia British Grand Prix at
Silverstone.
8 March AirAsiaRedTix.com is
launched, providing a smart
and convenient way to discover
and book tickets to a line-up
of international world-class
concerts and more.
8 April AirAsia of?cially signs a
strategic partnership agreement
between VietJet Aviation Joint
Stock Company (VietJet Air) and
AirAsia Berhad in Hanoi.
8 April AirAsia collaborates
with Sepang International
Circuit (SIC) to ?eld a
Malaysian team at the 2010
MotoGP World Championship
led by Muhammad Zulfahmi
Khairuddin.
28 April AirAsia launches
the AirAsia ASEAN Driver
Development Program,
expanding its presence in
motor-sports in the region and
stepping up its efforts to help
nurture a world-class Formula
One driver from ASEAN.
2010
MILESTONES
OVER A DECADE
20 May For a second year
running, Skytrax announces
AirAsia as the World’s Best Low
Cost Airline. The annual global
survey by the respected London-
based aviation consultancy
polled 18 million air travellers
worldwide in its annual survey.
11 July AirAsia unveils New
Skies, its state-of-the-art
booking system, placing it
ahead of competitors in offering
high-tech user-friendly booking
features.
27 July I Wayan Arya Sila
Arsadhana, a four-year-old from
Bali, Indonesia, undergoes a
successful heart correction
surgery at the National Heart
Institute (IJN). He is the latest
bene?ciary of AirAsia’s Donate
Your Loose Change campaign,
started in 2008 to raise funds
for needy heart patients to
undergo treatment at the
Institute.
2 September AirAsia becomes
the new title sponsor for the
ASEAN Basketball League’s
(ABL) 2010/2011 season.
24 September AirAsia and Lotus
Racing unveil an AirAsia Airbus
A320 aircraft adorned in the
legendary classic colours of
Lotus Racing.
13 October AirAsia celebrates
?ying its 100 millionth guest,
Irma Dewi, a 23-year-old
housewife from Indonesia who is
presented with 100 free seats.
25 November AirAsia Thailand
becomes an all-Airbus A320
?eet.
16 December AirAsia, through
its fully owned subsidiary
AA International Ltd, enters
into a partnership agreement
with Antonio Cojuangco Jr.,
Michael Romero and Marianne
Hontiveros to establish a low-
cost airline in the Philippines,
AirAsia Philippines.
16 December AirAsia extends
its association with the ASEAN
Basketball League (ABL) by
sponsoring the 2009-2010
Grand Finals Champions,
Philippine Patriots.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
22
100%
AirAsia Corporate Services Limited
100%
Airspace Communications Sdn. Bhd.
100%
AirAsia Go Holiday Sdn. Bhd.
100%
AirAsia (Mauritius) Ltd
AIRASIA
GROUP
AS AT 31 DECEMBER 2010
100%
Aras Sejagat Sdn. Bhd.
49%
AirAsia Pte Ltd
100%
AA Capital Ltd
100%
AirAsia (Hong Kong) Ltd
49%
PT Indonesia AirAsia
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
24
100%
Crunchtime Culinary
Services Sdn. Bhd.
100%
Asia Air Limited
100%
Koolred Sdn. Bhd.
100%
AirAsia (B) Sdn. Bhd.
50%
Asian Contact Centres Sdn. Bhd.
39.9%
AirAsia Philippines Inc
Legend:
Subsidiary Company
Associate Company
100%
AA International Ltd
49%
Thai AirAsia Co. Ltd
49%
AirAsia Go Holiday Co. Ltd
AIRASIA BERHAD
284669-W
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
25
>> JANUARY
AirAsia won The Budgie
World Low Cost Airlines
Asia Paci?c’s Best
Marketing Campaign of the
Year 2010
>> MARCH
Putra Brand Award 2010
– AirAsia Gold – AirAsia
Transportation, Travel and
Tourism
>> MARCH
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
conferred an Honorary
Doctorate of Business
Innovation by Universiti
Teknologi Malaysia
AWARDS &
ACCOLADES
2010
>> MAY
AirAsia received the Global
ICT Award for 2010 in the
private sector category
from the World Information
Technology and Service
Alliance (WITSA) in
Amsterdam
>> APRIL
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
honoured with the title of
Of?cer of the Legion d’
Honneur by the Government
of France in April 2010 for
outstanding contributions to
the French aviation industry
>> MAY
AirAsia Group CEO Dato’ Sri
Dr. Tony Fernandes received
the prestigious Nikkei Asia
Prize 2010 in Tokyo for his
contributions in the Asia
Paci?c region
>> MAY
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
the proud recipient of the
Masterclass Global CEO
of the Year Award at the
2nd Malaysia Business
Leadership Award (MBLA)
2010 ceremony for his
immense contributions to
the country’s economy
>>
AirAsia was named the Best
Asian Low Cost Carrier by TTG
at the 21st Annual TTG Travel
Awards 2010 Ceremony & Gala
Dinner in Centara Grand &
Bankok Convention Centre
>> FEBRUARY
AirAsia was awarded for
its Contribution to Taiwan
Tourism category at the
Taiwan Tourism Award
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
26
AWARDS &
ACCOLADES
2010
>> NOVEMBER
AirAsia was awarded the
2010 Aircraft Debt Deal
of the Year for Asia for the
purchase of 16 new Airbus
A320-200 through the
export credit loan ?nancing
provided by BNP Paribas
>> JULY
AirAsia was named one of
the top 10 airlines in the
passenger carriage category
by Changi Airport Group
(CAG)
>> MAY
World Information Technology
and Services Alliance (WITSA)
– Excellence awards 2010 for
Private Sector Excellence –
AirAsia Berhad
>> DECEMBER
Gold Malaysian Media
Awards – Best use of digital
search – AirAsia
>> DECEMBER
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes
was named Forbes Asia’s
Businessman of the Year
for 2010
>> DECEMBER
AirAsia Group CEO Dato’ Sri
Dr. Tony Fernandes received
the SME Overseas Platinum
Award 2010
>> JULY
CMO Asia Awards for
Excellence in Branding &
Marketing and Entrepreneur
excellence awards
>> OCTOBER
AirAsia was named the Best
Asian Low Cost Carrier for
2010 by TTG at the 21st
Annual TTG Travel Awards
2010 Ceremony & Gala
Dinner in Bangkok
>> JUNE
AirAsia was chosen as the
World’s Best Low Cost
Airline 2010 for the second
consecutive year by Skytrax
AirAsia bagged the Air Cargo
Industry Newcomer of the
Year Award 2010 at ACW
World Air Cargo Awards in
Shanghai
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
27
PAST
AWARDS
>> 2009
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was recognised with a Laureate
Award in the Commercial Air Transport
category at the Annual Laureate Awards by
Aviation Week in Washington DC, USA
• AirAsia was bestowed the coveted Brand
of the Year Award at Media’s Agency of
the Year (AOY) Awards held at the St.
Regis in Singapore
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the TTG Travel
Personality of the Year in the 20th Annual
TTG Travel Awards 2009 Ceremony & Gala
Dinner
• AirAsia was chosen as Brand of the Year
at the Agency of the Year Awards for 2009
by Media Magazine
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was given the 2009 Frost &
Sullivan Excellence in Leadership Award
for Exemplary Leadership Skills in driving
excellence within his organisation
• AirAsia and AirAsia X were joint winners
of the prestigious Centre for Asia Paci?c
Aviation (CAPA) Airline of the Year Award
for 2009 at the CAPA Aviation Awards for
Excellence
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes received the CAPA Legend
Award and entered the CAPA’s Aviation
Hall of Fame
• AirAsia received the World’s Best Low Cost
Airline Award from Skytrax
• AirAsia was named the Best Asian Low
Cost Carrier by TTG
>> 2008
• Low Cost Carrier of the Year awarded by
Kuala Lumpur International Airport (KLIA)
• Commendations of Prestige Award from
Macau Special Administrative Region
• AirAsia recognised as one of the 50 Most
Innovative Companies in the World by
FastCompany.com
• Airline Market Penetration Leadership of
the Year by Frost & Sullivan
• Rising Leaders – The Next 10 Years by
Singapore Institute of International Affairs
(SIIA) in collaboration with AXN Asia
• AirAsia was voted the Best Budget Airline
in Asia in the SmartTravelAsia.com 2008
Best in Travel Poll
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was presented the inaugural
Malaysian Global Brand Icon of the Year
Award by Deputy Prime Minister Dato’ Sri
Najib Tun Razak
• Winner of the Best Newcomer Award at
the prestigious 2008 Budgie World Low
Cost Airline Awards
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Tourism
Personality of the Year at the Libur
Tourism Awards 2008
• AirAsia and AirAsia Indonesia reaped
honours at the prestigious Friends of
Thailand Awards 2008
• AirAsia bagged the Best Asia Low Cost
Carrier Award from TTG for the second
time
• AirAsia emerged Top 5 among the most
recognised and admired airlines in the
Asia-Paci?c region in the Asia Paci?c Top
1,000 Brands survey
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was appointed to the Board of
Directors of Malaysia Tourism Promotion
Board
• AirAsia was awarded the PIKOM ICT
Organisation Excellence Award at the
PIKOM ICT Leadership Awards
>> 2007
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Brand Laureate
Brand Personality Asia Paci?c
• AirAsia ranked as one of Asia’s Best
Emerging Companies with regards to
Corporate Governance by The Asset
magazine
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
28
PAST
AWARDS
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was awarded the Minister’s
Special Recognition Award by Sabah
Tourism Awards 2007
• AirAsia was placed as the Best Low Cost
Airline in Asia by Skytrax Research of
London
• Airline of the Year 2007 by Centre for Asia
Paci?c Aviation
• Airline Human Capital Development
Strategy Award by Frost & Sullivan
>> 2006
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Master
Entrepreneur of the Ernst & Young
Entrepreneur of the Year – Malaysia 2006
• Asia’s Best Budget Airline by
SmartTravelAsia.com under the Best in
Travel 2006 list
• Asia’s Top 100 Brand by Media Magazine,
Hong Kong
>> 2005
• AirAsia received the Transport Company
of Excellence Award from Ports World
Sdn. Bhd. and the Chartered Institute of
Logistics and Transport Malaysia
• Asia’s Best Under a Billion by Forbes
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Asia Paci?c
Aviation Executive of the Year 2005
• Regional/Low Cost Leadership Award in
Airline Business Strategy Awards 2005 by
Airline Business
>> 2004
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the CAPA Asia
Paci?c Aviation Executive of the Year
2004
• AirAsia was named the Asia Paci?c Low
Cost Airline of the Year 2004 by the
Centre for Asia Paci?c Aviation (CAPA)
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was one of the 25 Stars of Asia
Honorees listing by Business Week
• AirAsia was named the Best Managed
Company in the Airlines and Aviation
Sector by Euromoney
• AirAsia was named the Best Newly Listed
Company (3rd Place) by Euromoney
• Triple A Regional Award for Best Airline
IPO for 2004 by The Asset magazine
• Best IPO of the Year by The Edge
Singapore
• Market Leadership Award by Air Transport
World
>> 2003
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the CEO of the Year
by Business Times and American Express
• AirAsia was named the Asia Paci?c Airline
of the Year 2003 by the Centre for Asia
Paci?c Aviation (CAPA)
• Developing Airline of the Year 2003 by
Air?nance Journal
• CIO Top 100 Honoree for excellence in
strategic IT deployment
• Given Malaysian Superbrands
status by Superbrands International
• airasia.com voted as the most popular
website for online shopping in the 11th
Malaysia Internet User Survey conducted
by ACNielsen Consult
PAGE >
29
AIRASIA BERHAD
ANNUAL REPORT
2010
MEDIA
HIGHLIGHTS
IN 2010
PAGE >
30
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
31
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP FINANCIAL
HIGHLIGHTS
For the year
ended
30 June
For the 6
months ended
31 December For the year ended 31 December
(RM MILLION, UNLESS OTHERWISE STATED) 2007 2007 2008 2009 2010
Revenue
Total expenses
EBIT
Associates contributions
Pro?t before tax
Tax
Net income
BALANCE SHEET
Cash & cash equivalents
Total Assets
Net Debt (Total Debt - Total Cash)
Shareholders' Equity
CASH FLOW STATEMENTS
Net cash from operating activities
Cash ?ow from investing activities
Cash ?ow from ?nancing activities
Net Cash Flow
CONSOLIDATED FINANCIAL PERFORMANCE (%)
Return on total assets
Return on shareholders' equity
R.O.C.E. (EBIT/(Net Debt + Equity))
EBIT Pro?t Margin
Net Income Margin
CONSOLIDATED OPERATING STATISTICS
Passengers carried
Capacity
Load factor (%)
RPK (million)
ASK (million)
Aircraft utilisation (hours per day)
Average fare (RM)
Yield Revenue per ASK (sen)
Cost per ASK (sen)
Cost per ASK - excluding fuel (sen)
Yield Revenue per ASK (USc)
Cost per ASK (USc)
Cost per ASK - excluding fuel (USc)
Number of stages
Average stage length (km)
Size of ?eet at year end (Malaysia)
Size of ?eet at year end (Group)
Number of employees at year end
Percentage revenue via internet (%)
RM-USD average exchange rate
1,603
1,341
262
(4)
278
220
498
595
4,779
1,959
1,662
595
(1,943)
1,509
161
10.4
30.0
7.2
16.3
31.1
8,737,939
11,140,764
78
9,863
12,391
12.0
171
12.9
10.8
5.2
3.65
3.06
1.46
68,195
1,088
34
54
2,924
65
3.54
1,094
875
219
–
277
149
426
425
6,430
3,272
2,099
256
(1,581)
1,141
(184)
6.6
20.3
4.1
20.0
38.9
5,197,567
6,621,276
78
5,930
7,919
11.9
195
13.8
11.0
5.4
4.04
3.23
1.59
38,507
1,183
39
65
3,474
65
3.42
2,855
3,207
(352)
–
(869)
373
(496)
154
9,406
6,453
1,606
(416)
(2,602)
2,749
(269)
–
–
–
–
–
11,808,058
15,660,228
75
14,439
19,217
11.8
204
14.9
16.7
9.5
4.45
5.00
2.83
89,118
1,207
44
78
3,799
70
3.34
3,133
2,220
913
–
622
(116)
506
746
11,398
6,862
2,621
784
(1,777)
1,591
598
4.4
19.3
9.6
29.1
16.2
14,253,244
19,016,280
75
16,890
22,159
12.0
168
14.1
10.0
5.8
4.02
2.85
1.66
105,646
1,166
48
84
4,597
76
3.52
3,948
2,881
1,067
–
1,099
(38)
1,061
1,505
13,240
6,352
3,641
1,619
(1,868)
1,006
757
8.0
29.1
10.7
27.0
26.9
16,054,738
20,616,120
78
18,499
24,362
12.2
177
16.2
11.8
6.9
5.03
3.67
2.13
114,534
1,184
53
90
4,702
77
3.22
Refer to page 226 for glossary.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
32
Revenue
RM Million
Profit Before Taxation
RM Million
Total Assets
RM Million
07 08 09 10 07 08 09 10
07 08 09 10
4
,
7
7
9
9
,
4
0
6
1
1
,
3
9
8
1
3
,
2
4
0
1
,
6
6
2
1
,
6
0
6
2
,
6
2
1
3
,
6
4
1
2
7
8
(
8
6
9
)
6
2
2
1
,
0
9
9
1
,
6
0
3
2
,
8
5
5
3
,
1
3
3
3
,
9
4
8
07 08 09 10
Shareholders’ Equity
RM Million
RM11,398
2009
RM622
2009
RM3,133
2009
RM2,621
2009
RM3,948
2010
RM1,099
2010
2010
RM3,641
2010
RM13,240
GROUP FINANCIAL HIGHLIGHTS
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
33
BALANCE
SHEETS
TOTAL ASSETS
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
Available-for-sale Financial Assets
Other Investments
Inventories
Receivables & Prepayments
Deposits, Cash and Bank Balances
Other Assets
Goodwill
Property Plant and Equipment
Borrowings
Sales in Advance
Trade & Other Payables
Derivative Financial Instruments
Current Tax Liabilities
0.2%
0.2%
13.0%
6.5%
69.7%
10.3%
0.1%
70.3%
10.4%
11.4%
6.5%
1.2%
0.1%
0.1%
2010
2009
86.7%
3.2%
10%
0.1%
2009
81.9%
3.4%
10%
4.7%
2010
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
34
SHARE
PERFORMANCE
SHARE PRICE & VOLUME TRADED
2010 Monthly Trading Volume & Highest-Lowest Share Price
MARKET CAPITALISATION as at 31 December 2010
Total Assets
RM Million
RM7,016
2010
RM3,805
2009
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total
Volume (’000)
180,168,300 62,649,300 187,300,800 101,860,200 113,744,800 146,440,100 212,072,700 244,696,700 195,368,100 129,034,000 180,995,600 143,885,400
Highest (RM) 1.31 1.46 1.45 1.43 1.35 1.33 1.53 1.74 2.25 2.62 2.65 2.74
Lowest (RM) 1.43 1.33 1.27 1.31 1.11 1.22 1.25 1.50 1.75 2.12 2.33 2.53
Jan
1
8
0
,
1
6
8
,
3
0
0
6
2
,
6
4
9
,
3
0
0
1
8
7
,
3
0
0
,
8
0
0
1
0
1
,
8
6
0
,
2
0
0
1
1
3
,
7
4
4
,
8
0
0
1
4
6
,
4
4
0
,
1
0
0
2
1
2
,
0
7
2
,
7
0
0
2
4
4
,
6
9
6
,
7
0
0
1
9
5
,
3
6
8
,
1
0
0
1
2
9
,
0
3
4
,
0
0
0
1
8
0
,
9
9
5
,
6
0
0
1
4
3
,
8
8
5
,
4
0
0
Feb Mar Apr May Jun Jul Aug Sep Oct
Highest
Lowest
Volume
Nov Dec
06
4
,
4
8
5
2
,
0
5
3
3
,
8
0
5
7
,
0
1
6
3
,
5
1
9
07 08 09 10
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
35
AirAsia’s
flying
woman
Nadira Ramli
AirAsia Pilot
now everyone can fy
“ At AirAsia, we are
all treated as equals.
There’s no such thing
as a male or female
pilot. Only good or
great pilots. It’s thanks
to people like Dato’ Sri
Dr. Tony Fernandes who
advocate equal rights. ”
Issued by Barclays Bank PLC, authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange, Barclays Capital is the investment banking
division of Barclays Bank PLC, which undertakes US securities business in the name of its wholly-owned subsidiary Barclays Capital Inc., an SIPC and FINRA member. © 2011 Barclays
Bank PLC. All rights reserved. Barclays Capital is a trademark of Barclays Bank PLC.
DB2011-084 AIR ASIA P.indd 1 5/6/11 4:29:25 PM
BOARD OF
DIRECTORS
DATO’ ABDEL AZIZ @
ABDUL AZIZ BIN ABU BAKAR
DATO’ SRI DR.
TONY FERNANDES
DATO’ KAMARUDIN
BIN MERANUN
DATO’ LEONG
KHEE SEONG
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
40
DATO’ KAMARUDIN
BIN MERANUN
CONOR MC CARTHY
DATO’ FAM LEE EE
DATUK ALIAS BIN ALI
DATO’ MOHAMED KHADAR
BIN MERICAN
MOHD OMAR BIN MUSTAPHA
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
41
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTORS’
PROFILE
DATO’ ABDEL AZIZ @ ABDUL AZIZ BIN ABU BAKAR, Malaysian, aged 58, was appointed as Non-Executive
Director of the Company on 20 April 2005 and on 16 June 2008, he was re-designated to Non-Executive
Chairman. He is also the Chairman of the Nomination Committee. Prior to this, he served as an
Alternate Director of the Company to Dato’ Pahamin Ab. Rajab since 11 October 2004. He also served
earlier as a Director of the Company from 12 December 2001 to 11 October 2004. He is currently
the Non-Executive Chairman of VDSL Network Sdn. Bhd. He is also the Chairman of PAIMM (Academy
of Malaysian Music Industry Association) and PRISM (Performance and Artists Rights Malaysia Sdn.
Bhd.), performers of recorded music collection society. From 1981 to 1983 he was Executive Director of
Showmasters (M) Sdn. Bhd., an artiste management and concert promotion company. He subsequently
joined BMG Music and was General Manager from 1989 to 1997 and Managing Director from 1997
to 1999. He received a Diploma in Agriculture from Universiti Pertanian Malaysia in 1975, his BSc in
Agriculture Business from Louisiana State University, USA in 1978, and an MBA from the University of
Dallas, USA in 1980.
DATO’ ABDEL AZIZ @
ABDUL AZIZ BIN ABU BAKAR
Non-Executive Chairman
PAGE >
42
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTORS’ PROFILE
DATO’ SRI DR. TONY FERNANDES,
Malaysian, aged 47, was appointed
Group Chief Executive Of?cer of the
company in December 2001. He is
also a member of the Employees’
Share Option Scheme Committee
of the Board.
He was Financial Controller at
Virgin Communications London
(1987 – 1989), and moved on
to be Senior Financial Analyst at
Warner Music International London
(1989 – 1992), Managing Director
at Warner Music Malaysia (1992 –
1996), Regional Managing Director,
ASEAN (1996 – 1999) and Vice
President, ASEAN at Warner Music
South East Asia (1999 – 2001).
He was admitted as an Associate
Member of the Association of
Chartered Certi?ed Accountants
in 1991, and became a Fellow
Member in 1996.
In 1999, DYMM Sultan Selangor
Sultan Salahuddin Abdul Aziz
Shah bestowed him the title
‘Setia Mahkota Selangor’ for his
contributions to the Malaysian music
industry. He was the recipient of
the ‘Recording Industry Person of
the Year 1997’ by the Recording
Industry Association of Malaysia.
With AirAsia, he received
accolades from international press
and industry observers such as
‘Airline Business Strategy Award
2005 and Low Cost Leadership’ by
Airline Business and ‘Asia Paci?c
Aviation Executive’ by the Centre
for Asia Paci?c Aviation (CAPA) for
the year 2004 and 2005.
In July 2005, he was conferred
the Darjah Datuk Paduka Tuanku
Ja’afar (DPTJ) which carries
the title Dato’ by the Negeri
Sembilan’s Yang DiPertuan Besar
Tuanku Ja’afar Tuanku Abdul,
for his services rendered to the
betterment of the nation and
community. In 2006 and 2007,
he bagged ‘The Brand Laureate’
Brand Personality for his exemplary
performance, dedication and
contribution towards the aviation
industry in Malaysia.
In 2007, he was bestowed the
Darjah Sultan Ahmad Shah
Pahang (DSAP) which carries
the title Dato’ by the Pahang’s
KDYMM Sultan Haji Ahmad Shah
ibni Almarhum Sultan Sir Abu
Bakar Riayatuddin Al-Muadzam
Shah for his services rendered to
the betterment of the nation and
community. In 2008, he was again
honoured by the Sultan with the
Darjah Kebesaran Sultan Ahmad
Shah Pahang Yang Amat Di Mulia
which carries the title Dato’ Sri.
The ‘CAPA Legend Award 2009
(Aviation Hall of Fame)’ recognised
his in?uential actions for directly
shaping the way the aviation
industry has evolved, and the
‘Airline CEO of the Year Award
for 2009’ from Jane’s Transport
Finance was for his success in
leading and growing AirAsia into
the world’s best low-cost airline
and Asia’s largest.
In March 2010, he received an
Honorary Doctorate of Business
Innovation from Universiti Teknologi
Malaysia (UTM) for his role in
changing the face of aviation
and in bene?tting travelers and
economies locally and in the
region.
In April 2010, he was honoured
with the title of ‘Of?cer of
the Legion d’ Honneur’ by
the government of France for
outstanding contributions to the
French aviation industry. It is the
highest rank of honour that the
government of France can award to
a non-French citizen.
The following month, he received
the prestigious Nikkei Asia Prize in
Tokyo for his contributions to the
growth of Asia. The prize, given
by leading Japanese newspaper
publisher Nikkei Inc., recognised
his role in democratising travel in
Asia.
Fernandes also received
the prestigious Forbes Asia
Businessman of the Year 2010
award. He is the ?rst Malaysian
and Southeast Asian to receive the
award.
In February 2011, he was awarded
the Commander of the Order of the
British Empire (CBE) honour by Her
Majesty Queen Elizabeth II. The
award was conferred on him for
services in promoting commercial
and educational links between the
United Kingdom and Malaysia.
In April 2011, Tony was conferred
Darjah Seri Paduka Mahkota
Perak (S.P.M.P) which carries
the title Dato’ Seri at the Istana
Iskandariah in Kuala Kangsar.
DATO’ SRI DR. TONY FERNANDES
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
43
DATO’ KAMARUDIN BIN MERANUN, Malaysian, aged 49, was appointed Director of the Company on 12
December 2001. In January 2004, he was appointed Executive Director and on 8 December 2005, he
was re-designated to Group Deputy Chief Executive Of?cer. He is also the Chairman of the Employees’
Share Option Scheme Committee of the Board.
Prior to joining the Company, he worked in Arab-Malaysian Merchant Bank from 1988 to 1993 as
a Portfolio Manager, managing both institutional and high net-worth individual clients’ investment
funds. In 1994, he was appointed Executive Director of Innosabah Capital Management Sdn. Bhd.,
a subsidiary of Innosabah Securities Sdn. Bhd. He subsequently acquired the shares of the joint
venture partner of Innosabah Capital Management Sdn. Bhd., which was later renamed Intrinsic Capital
Management Sdn. Bhd.
Dato’ Kamarudin received a Diploma in Actuarial Science from University Technology MARA (UiTM)
and was named the “Best Actuarial Student” by the Life Insurance Institute of Malaysia in 1983. He
received a B.Sc. degree with Distinction (magna cum laude) majoring in Finance in 1986, and an MBA
in 1987 from Central Michigan University.
DATO’ KAMARUDIN
BIN MERANUN
Group Deputy
Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
44
CONOR MC CARTHY, Irish, aged 49, was appointed Non-Executive
Director of the Company on 21 June 2004. He heads the Safety
Review Board of the Company. He is Managing Director of
PlaneConsult, a leading aviation business solutions provider which
he set up in 2000 which specialises in advising and establishing
Low Cost Carriers.
Prior to establishing PlaneConsult, Conor was the Director of Group
Operations at Ryanair from 1996 to 2000. Before joining Ryanair, he
was the CEO of Aer Lingus Commuter. Prior to that, he was General
Manager/SVP for Aer Lingus in the Marketing and Strategic Planning
divisions.
He spent 18 years with Aer Lingus in all areas of the airline
business from Engineering, Operations and Maintenance to
Commercial Planning, Marketing and Route Economics to Finance,
Strategic Management, Fleet Planning and General Management.
He is a qualifed Avionics Engineer and holds a First Class Honours
degree in Engineering from Trinity College Dublin.
Mr. Mc Carthy is currently the Chairman of Dublin Aerospace, an
MRO based in Ireland, and also serves as a Director on the Board
of Pegasus Airlines in Turkey.
DATO’ LEONG KHEE SEONG, Malaysian, aged 72, was appointed
Independent Non-Executive Director of the Company on 8 October
2004. He is Chairman of the Audit Committee and a member of
the Remuneration Committee of the Board. He was Deputy Minister
of Primary Industries from 1974 to 1978, Minister of Primary
Industries from 1978 to 1986 and a Member of Parliament from
1974 to 1990. Prior to this, he was a substantial shareholder
of his family’s private limited companies, which were principally
involved in general trading. He was the Chairman of the General
Agreement on Tariffs and Trade’s Negotiating Committee on Tropical
Products (1986 to 1990) and was the Chairman of the Group of 14
on ASEAN Economic Cooperation and Integration (1986 to 1987).
He graduated with a degree in Chemical Engineering in 1964 from
University of New South Wales, Australia. He is an Independent
Non-Executive Director of TSH Resources Berhad and Industrial and
Commercial Bank of China (Malaysia) Berhad.
CONOR MC CARTHY DATO’ LEONG KHEE SEONG
DIRECTORS’ PROFILE
PAGE >
45
AIRASIA BERHAD
ANNUAL REPORT
2010
DATO’ FAM LEE EE, Malaysian, aged 50, was appointed Independent
Non-Executive Director of the Company on 8 October 2004. He
is also a member of the Audit, Remuneration and Nomination
Committees of the Board. He received his BA (Hons) from the
University of Malaya in 1986 and an LLB (Hons) from the University
of Liverpool, England in 1989. He obtained his Certi?cate of Legal
Practice in 1990 and has been practising law since 1991 and
currently is a senior partner at Messrs YF Chun, Fam & Yeo. He also
serves as a Director of M-Mode Berhad.
DATO’ MOHAMED KHADAR BIN MERICAN, Malaysian, aged 55, was
appointed Independent Non-Executive Director of the Company on
10 September 2007. He is also a member of the Safety Review
Board and Audit Committee of the Board. He has had more than
25 years’ experience in ?nancial and general management. He has
been an auditor and a management consultant with an international
accounting ?rm, before joining a ?nancial services group in 1986.
Between 1988 and April, 2003, Dato’ Khadar held several senior
management positions in Pernas International Holdings Berhad
(now known as Tradewinds Corporation Berhad), a company listed
on the Main Market of Bursa Malaysia Securities Berhad, including
as President and Chief Operating Of?cer. He is a member of both
the Institute of Chartered Accountants in England and Wales
and the Malaysian Institute of Accountants. He is also presently
a Director of Rashid Hussain Berhad, RHB Capital Berhad, RHB
Investment Bank Berhad (formerly known as RHB Sakura Merchant
Bankers Berhad) and ASTRO All Asia Networks PLC.
DATO’ FAM LEE EE DATO’ MOHAMED KHADAR
BIN MERICAN
PAGE >
46
AIRASIA BERHAD
ANNUAL REPORT
2010
DATUK ALIAS BIN ALI, Malaysian, aged 63, was appointed
Independent Non-Executive Director of the Company on 23
September 2005. He is also the Chairman of the Remuneration
Committee and a member of the Audit and Nomination Committees
of the Board.
Prior to this, he had a long and distinguished career with the
Government which began soon after his graduation from the
University of Malaya in 1970. He started as an Administration
Trainee Offcer in the Statistics Department. He subsequently joined
the Prime Minister’s Department as Administration Development
Of?cer. Whilst still with the department, he completed his Master
in Business Management and assumed the position of Head
of Department (Consultancy) at the National Institute of Public
Administration (INTAN) in 1975.
Over the next 15 years with the Government, he held various
senior positions in several Ministries and Department including
as Deputy Director of Training (Operations) in the Public Services
Department, Under Secretary (Establishment and Services) in the
Ministry of Works and Director of Industrial Development Division
in the Ministry of Trade and Industry. He moved back to the Prime
Minister’s Department in 1990 as Cabinet Under Secretary. In
June 2000, he was appointed Secretary General of the Ministry of
Health, a post he held until his retirement in March 2004.
Datuk Alias received a Master in Business Management from the
Asian Institute of Management, Philippines in 1975 and a Bachelor
of Economics (Honours) from the University of Malaya in 1970.
He is also presently a Director of FIMA Corporation Berhad, CCM
Duopharma Biotech Bhd. and Melati Ehsan Holdings Bhd.
MOHD OMAR BIN MUSTAPHA, Malaysian, aged 39, was appointed as
Independent Non-Executive Director of the Company on 16 March 2011.
He co-founded Ethos & Company in June 2002. He led Ethos as Managing
Partner from 2002 to 2010, and became Chairman of the ?rm in
January 2011.
As Managing Partner he provided the overall stewardship for the
partnership group and associates, and guides the thought leadership
and client development agenda of the ?rm. In 2004, he took a sabbatical
from Ethos to serve as Special Assistant to Deputy Prime Minister
Dato’ Sri Najib Tun Razak for economic, corporate sector and foreign
policy issues. He re-joined Ethos as Managing Partner in 2006 upon the
untimely passing of his partner and co-founder Dr. Liew Boon Horng. In
2007, he co-founded Ethos Capital, a Malaysian based private equity frm
focused on providing equity capital and management support to growth
companies in Southeast Asia. Ethos Capital’s maiden fund is in excess
of RM200 million.
He has signi?cant experience in the Malaysian and international
corporate and government sectors, where he has engaged with and
advised top level decision makers on issues of business strategy, public
policy and regulatory engagement, corporate governance and leadership,
performance and talent management. Prior to establishing Ethos, he
was a consultant with McKinsey & Company based in Kuala Lumpur and
London. He has served multinational clients in the telecoms, energy,
media, retail, banking and government sectors in Southeast Asia, the
Middle East and Western Europe. He started his career as a Corporate
Planning Manager with Petronas and subsequently as a Vice President
with the Multimedia Development Corporation.
He is a member of the National Economic Council chaired by the Prime
Minister. He was elected by the World Economic Forum as a 2007 Young
Global Leader and is a 2008 Eisenhower Fellow. He is a founder of the
Young Leaders Programme of the World Islamic Economic Forum.
He graduated from Oxford University where he obtained his BA (Hons)
and MA degrees in Politics, Philosophy and Economics. He has attended
advanced leadership studies at the Harvard Kennedy School of
Government.
He also serves as an independent non-executive director on the boards
of Petroliam Nasional Berhad and Symphony House Berhad.
DIRECTORS’ PROFILE
DATUK ALIAS BIN ALI MOHD OMAR BIN MUSTAPHA
Notes:
Family Relationship – None of the Directors
had any family relationship with any director
and/or major shareholder of AirAsia.
Con?ict of Interest – None of the Directors
has any con?ict of interest with AirAsia
Group.
Conviction for Offences – None of the
Directors has been convicted for offences
within the past 10 years other than traf?c
offences, if any.
Attendance at Board Meetings – The
attendance of the Directors at Board of
Directors’ Meeting is disclosed in the
Statement of Corporate Governance.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
47
SENIOR
MANAGEMENT
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
Details of Dato’ Sri Dr. Tony
Fernandes are disclosed in the
Directors’ Pro?le on page 43 of
this Annual Report.
Dato’ Kamarudin bin Meranun
Deputy Group Chief Executive
Of?cer
Details of Dato’ Kamarudin Meranun
are disclosed in the Directors’ Pro?le
on page 44 of this Annual Report.
Tassapon Bijleveld
Chief Executive Of?cer
AirAsia Thailand
Tassapon joined AirAsia Thailand in
2003 as Chief Executive Of?cer and
is entrusted with the responsibility
of overseeing all aspects of the
airline’s operations as well as
driving growth in Thailand. Tassapon
has more than 12 years’ experience
in the consumer products industry,
having worked in various countries
in Southeast Asia and Indochina
for two Fortune 500 companies
– Adams (Thailand) Co. Ltd. (a
division of Warner Lambert) and
Monsanto (Thailand) Co. Ltd. Prior
to joining AirAsia he was Managing
Director of Warner Music (Thailand)
Co. Ltd. for ?ve years.
Captain Dharmadi
Chief Executive Of?cer
AirAsia Indonesia
Dharmadi joined AirAsia Indonesia
in 2007 as Chief Executive Of?cer.
He has more than 32 years’ working
experience in Garuda Indonesia
Airlines, holding several managerial
positions such as Flight Crew
Training Manager, Training Centre
Director, Senior Vice President-
Procurement, and Executive
Vice President-Operations. He
also served as a Captain Pilot
B747-400 Flight Crew in Asiana
Airlines, Korea from 2005-2007.
He holds a Bachelor of Technical
Engineering degree from Indonesia,
and a Master of Management
(International Marketing
Management) degree from PPM
Business School, Indonesia.
Bo Lingam
Chief of Operations and Planning
Bo has worked extensively in the
publication and music industry
at various production houses. He
joined AirAsia in 2001 as Ground
Operations Manager. Prior to his
current appointment as Regional
Head of Operations, Bo held several
other key roles at AirAsia including
as Regional Director – Guest
Services and Senior Manager –
Purchasing and Supplies before he
was seconded to AirAsia Thailand to
oversee and assist in the initial set-
up of AirAsia Thailand operations in
Bangkok.
From left to right: Bo Lingam, Dato’ Kamarudin bin Meranun, Dato’ Sri Dr. Tony Fernandes, Tassapon Bijleveld, Captain Dharmadi
PAGE >
48
AIRASIA BERHAD
ANNUAL REPORT
2010
Rozman bin Omar
Regional Head – Finance
Rozman Omar FCCA is our Regional
Head, Finance. He was part of the
team tasked with the ?otation of
AirAsia Berhad on Bursa Malaysia in
2004 and was also involved in the
formation of AirAsia’s joint ventures
in Thailand and Indonesia. He was
previously Chief Financial Of?cer of
AirAsia Indonesia until 2006. He has
over 22 years of corporate ?nance
experience with various ?nancial
institutions prior to joining the Group.
Kathleen Tan
Regional Head – Commercial
Listed by 4 Hoteliers, a leading hotel
and travel news portal in the industry,
as one of Asia’s top 10 most in?uential
women in the travel industry, Kathleen
helped AirAsia grow from a young
airline to a global and powerful brand
in the aviation industry. An opportunist
marketer and strong advocate of social
media, Kathleen was one of the ?rst
group of marketers to embrace digital,
social media and mobile marketing
as tool to engage with AirAsia guests.
At AirAsia, Kathleen oversees a
huge portfolio that includes Revenue
Management, Marketing, Branding,
Social Media, Sales & Media,
Communications, Social Media, Mobile
and AirAsiaGo.
Johan Aris Ibrahim
Regional Head
Financial Services & Loyalty
Johan Manages Regional non ?ight
ancillary products/services portfolio
which includes Financial Products
which includes Insurance, Co brand
credit cards, savings account,
e Gift Voucher and Payment, Loyalty
Programme, Online entertainment
ticket – airasiaredtix.com and
Merchandise – in-?ight and online-
airasiamegastore.com
Johan has varied consumer marketing
experience with specialisation in
customer loyalty management and
database marketing. He has been
involved in various industries ranging
from oil and gas, banking, and airlines,
to name a few.
He started his career with Shell
Malaysia in various capacities including
development and launch of new
products to the market. One of his
speci?c involvements in Shell was in
the set up and launch of Bonuslink, the
?rst multi party loyalty programme in
Malaysia. He then moved on to set up
RealRewards, another multiparty loyalty
programme, adding a touch of vibrancy
and competition to the industry which
was still nascent, at that point in
time, in Malaysia. He then moved to
banking and spent three years with
Maybank. While in Maybank he was
instrumental in purchasing the AMEX
franchise in Malaysia and establishing
the TreatsPoints programme, amongst
other things. He enjoys new and
“unexpected” challenges. He holds
Andrew Littledale
Group Financial Controller
Andrew has had nearly 22 years’
experience in the banking and industry
sectors, having worked in various
countries such as Chile, Egypt and
the United Kingdom. Prior to joining
AirAsia, he was the Chief Financial
Of?cer for AirAsia X since its inception
in 2007. Andrew’s other appointments
include Group Reporting Manager
of Cookson plc, Group Management
Accountant of FKI plc in London and
Group Financial Accountant with Blue
Circle Industries plc, London. He holds
a bachelor’s degree in Zoology from the
University of London and is an ACMA
qualifed accountant. Andrew is also a
holder of a JAA Private Pilot’s License.
Aireen Omar
Regional Head
Corporate Finance & Treasury
Aireen joined AirAsia in 2006 and
is currently in charge of corporate
?nance, treasury, investor relations
and fuel procurement. She started her
career with Deutsche Bank Securities
in New York. She moved back to
Malaysia in 2001 to join the Maybank
Group where she originated, structured
and executed debt securities, including
Islamic securities. In 2003, she joined
Bumiwerks Capital Management where
she executed asset securitisation,
structured ?nance and project ?nance
securities, including the issue of
Malaysia’s ?rst residential mortgage-
backed securities. Aireen graduated
with a B.Sc. in Economics from London
School of Economics and Political
Science and an MA in Economics from
New York University.
an Actuarial Science degree from the
London School of Economics and
Political Science.
Mazliana binti Mohamad
Regional Head – Audit and Consulting
Service
Mazliana Mohamad was appointed
the Regional Head of Audit and
Consulting Services in 2010. Her
main responsibilities include providing
independent and objective assurance
and consulting services designed
to improve the effectiveness and
ef?ciency of AirAsia’s operations and
integrity of the ?nancial reporting and
to ensure compliance with applicable
laws and regulations.
She has over 14 years of experience
in diverse ?elds that include auditing,
management consulting, corporate
governance and accounting. She began
her career with a ?nancial institution
in 1997, gaining banking experience in
accounting, Basel II, internal auditing,
project management and EWRM.
She had also assisted development
banks in the implementation of
their respective ERM frameworks.
Before joining AirAsia, she was
with a government-owned company
where she was responsible for
establishing internal audit function
and independently reviewing the
national-level ICT strategic initiatives/
projects. She holds an honours degree
in accounting and is Certi?ed Internal
Auditor (USA). She is a Chartered
Member of Institute Internal Auditor
and Chartered Accountant (Malaysia).
SENIOR MANAGEMENT
From left to right: Johan Aris Ibrahim, Aireen Omar, Rozman bin Omar, Kathleen Tan, Andrew Littledale, Mazliana binti Mohamad
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
49
Kamarulzaman bin Ahmad
Regional Head – Strategy,
Innovation and Customer
Experience
Kamarulzaman Ahmad joined
AirAsia the regional low-cost airline
carrier, in September 2010 after
serving PETRONAS for 13 years.
Among Zaman’s achievements
there was his ?ve year involvement
from 2000 – 2005 as Electronic
Systems Engineer for Team Sauber
PETRONAS F1 race team based in
Hinwil, Switzerland, and as Senior
Manager of the Frontier Technology
Unit, Research & Technology
Division of PETRONAS. His last
position was as Head of Technical
Services at PETRONAS Ammonia
in Terengganu, Malaysia. Zaman
graduated with a Bachelor of
Engineering degree in Electrical and
Electronics from Imperial College,
London, United Kingdom. Apart
from English and Bahasa Malaysia,
Zaman also speaks German.
Captain Adrian Jenkins
Regional Head – Flight Operations
Captain Adrian joined AirAsia in
1996, when the airline was under
HICOM Holdings Berhad. Prior to
his appointment as Regional Head
for Flight Operations in September
2006, he served AirAsia in various
positions including as an Instructor
and Company Check Airman,
Assistant Chief Pilot – Training and
His team established the AirAsia
Thailand aircraft operating
certi?cate as well as reactivating
AirAsia Indonesia’s aircraft
operating certi?cate and revitalising
the business unit. He has over 30
years of experience in the airline
industry. He is a licensed pilot for
multiple types of aircraft, a training
Captain, an authorised examiner,
and has also served as ?ight
operations manager.
Dato’ Abdul Nasser Abu Kassim
Regional Head – Government &
Middle East Business Development
Dato’ Nasser served as Regional
Director, In-?ight Services, Charter
and Cargo for AirAsia before focusing
his efforts on the large business
as Regional Head of Cargo on the
cargo business unit. Appointed to
his current position in July 2009,
his portfolio includes business
development for the government
and the Middle East. His prior
appointments at AirAsia include
that of Country Director of AirAsia
Indonesia and Executive Director,
Business Development managing
AirAsia’s Haj operations, cargo,
charter and in-?ight services. Dato’
Nasser had an illustrious 18-year
career at Warner Music Malaysia
Sdn. Bhd. where he held various key
positions. As one of the pioneers
in the Malaysian music industry,
he managed some of the biggest
selling artists in Malaysia and was
responsible for marketing these
talents across Asia.
Standards and Assistant Chief Pilot
– Operations. He also helped in
the setting up of AirAsia Thailand’s
?ight operations and pilot training.
His current portfolio includes
operations, training standard, ?ight
crew and network management.
Azhari bin Mohd Dahlan
Regional Head – Engineering
Azhari joined AirAsia in 2004,
overseeing the Group’s airline
engineering functions in Malaysia,
Indonesia, Thailand and the new
regional joint venture Airlines.
Prior to that, Azhari was Manager,
Planning and Logistics for AirAsia
Berhad. His current Regional
portfolio includes Maintenance
and Engineering Technical
Services, Contract and Warranty,
Quality Assurance, Projects Unit,
Data Management, Engineering
Purchasing and Logistics
Departments. Azhari is a Licensed
Aircraft Engineer.
Captain Chin Nyok San
Regional Head – Business
Development
Captain Chin Nyok San was one
of the pioneers of AirAsia, then
under HICOM Holdings Berhad.
Captain Chin has been the Head
of Business Development since
January 2005. His current portfolio
includes joint venture and business
development.
Ashok Kumar
Regional Head – Strategy, Airport
and Planning
Ashok Kumar has been Regional
Head of Strategy, Airport and
Planning of AirAsia since January
2005. Prior to that, Ashok was
Regional Director, Government and
Business Relations. His current
portfolio includes negotiating
airport charges; developing,
scheduling and planning of routes;
?eet management and obtaining
regulatory approvals; coordination
of AirAsia’s infrastructure
developments and coordination with
relevant authorities on the Group’s
needs for airport infrastructure.
He has had more than 40 years
experience in the airline industry,
having worked at Malaysia-
Singapore Airlines as Management
Trainee/Marketing Executive from
1970 to 1972 and Malaysia Airlines
from 1972 to 2003, where he held
various key positions, including
Assistant General Manager,
Operations Planning, before joining
the Company in 2003 as Senior
Manager, Commercial Planning and
Strategy. Ashok received a Bachelor
of Applied Economics (Hons) degree
from the University of Malaya in
1970.
From left to right: Ashok Kumar, Captain Chin Nyok San, Dato’ Abdul Nasser Abu Kassim, Captain Adrian Jenkins, Azhari bin Mohd Dahlan, Kamarulzaman bin Ahmad
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
50
SENIOR MANAGEMENT
Lau Kin Choy
Regional Head – Innovation,
Commercial & Technology
Lau Kin Choy has been Regional
Head of Innovation, Commercial
and Technology since 2009.
From 2004 to 2008, he was the
Regional Head of Information
Technology & E-Commerce and
prior to that the Chief Information
Of?cer from August 2002. His
current portfolio includes airline
system, IT operations, intranet,
networking, data relationship
management, business intelligence,
new media and payment channel.
Prior to joining the Company, Lau
was the General Manager of WEB
Distribution Services Sdn. Bhd., a
joint venture music distribution and
logistic center for Warner Music,
EMI Malaysia and BMG Music, from
1998 to 2002. Lau was a ?nalist
for Pikom’s 2006 CIO Recognition
Award.
Evelyn Koh
Regional Head of Legal –
Commercial and Compliance
Evelyn came on board AirAsia as
General Counsel at the end of
2006. Her legal career spans over
22 years of legal practice including
acting as in-house Legal Counsel for
Carlsberg, Channel 9 and Uniphone
Telecommunciations, where
she also served all companies
within the Sapura Group. Her
experience covers a diversity of
businesses and industries which
include manufacturing, property
investment, telecommunications, IT,
education, automotive, broadcast
and multimedia. Evelyn holds an
LL.B (External), from the University
of London, UK and is currently the
Regional Head - Legal, Commercial
& Compliance of AirAsia Berhad.
Amir Faezal bin Zakaria
Regional Head of Legal – Financial
& Strategic Services and
Operations
Amir has a wide range of legal
experience in areas of commercial
laws, corporate ?nance, banking and
transport. Prior to joining AirAsia,
Amir had 13 years of experience
as a legal practitioner in a number
of Malaysian legal ?rms including
Rashid & Lee (now Shahrizat Rashid
& Lee) and Zaid Ibrahim where he
specialised in corporate law, banking
and ?nance as well as infrastructure
projects. His current portfolio is to
provide legal support to the group
for aircraft ?nancing, leases, joint
ventures, engineering contracts
as well as contracts relating to
operations. He also manages
litigation matters for the group.
Amir graduated with LLB (Hons)
from Leeds Metropolitan University,
is a member of the Honourable
Society of Lincoln’s Inn since 1992
and was called to the Malaysian Bar
in 1993.
Adzhar Ibrahim
Regional Head – People
Adzhar has 29 years of working
experience in human resources/
people function, 24 of which at
head level, in various companies
involved in many sectors, such
as semiconductor, healthcare,
telecommunications, banking and
a huge local conglomerate. He also
has many experiences in start-
ups, and was part of the start-up
management team for Baxter
Healthcare (Malaysian Operations)
and Maxis. Prior to joining AirAsia
as Regional Head People in
January 2010, he was with DiGi
Telecommunications Sdn. Bhd. His
current portfolio are rewards and
people services, industrial relations
and compliance, corporate culture,
resourcing and talent management,
training and staf?ng.
V. Raman Narayanan
Regional Head – ASEAN Affairs
Raman joined AirAsia as Regional
Head, Communications in 2009.
An award-winning journalist, he
began his career with The New
Straits Times in 1973 before
moving to The Star in 1977. He
was named “Reporter of the Year”
in the inaugural Malaysian Press
Institute’s awards in 1982. In 1988,
he left for the United States, joining
The Atlanta-Journal Constitution,
where he served as Opinion Page
Editor. During his tenure, the AJC
won several national awards for
the section. In 1999, he became
an editor at CNN International. In
2002, he moved back to the AJC
as International Editor. He returned
to Malaysia in 2007, serving as a
media consultant to AirAsia before
joing the airline full-time. In late
2010, Raman moved to the Group
CEO’s Of?ce to assume the newly
created position of Regional Head,
ASEAN Affairs.
From left to right: Adzhar Ibrahim, Amir Faezal bin Zakaria, Evelyn Koh, Lau Kin Choy, V. Raman Narayanan
PAGE >
51
AIRASIA BERHAD
ANNUAL REPORT
2010
THAILAND
FROM LEFT TO RIGHT
Pornanan Gerdpraset – Chief Financial Controller
Bovornovadep Devakula – Director – Business Development
Preechaya Rasametanin – Director – Engineering
Tanapat Ngamplang – Director – Operations
Santisuk Klongchaiya – Director – Commercial
PAGE >
52
AIRASIA BERHAD
ANNUAL REPORT
2010
SENIOR MANAGEMENT
INDONESIA
FROM LEFT TO RIGHT
Soeratman Doerachman – Advisor to Chief Executive Of?cer
H. Jafrie Arief – Director – Strategy, Airport & Planning
Perbowoadi – Director – Maintenance & Engineering
Widijastoro Nugroho – Director – Commercial
Capt. Poedjiono – Director – Flight Operations
Capt. Sonny Sasono – Director – Safety and Security
PAGE >
53
AIRASIA BERHAD
ANNUAL REPORT
2010
“ The cabin crew made a
very out-of-the-ordinary
announcement: ‘Ladies
& Gentlemen, for your
information, AirAsia is all
about making everyone’s
dream come true. Today,
AirAsia is going to make
someone’s dream come
true.’ I then proposed to
my future wife. ”
A high-flying
proposal
Mr Lau Wei Lian
Kuching, Sarawak
now everyone can fy
BLACK YELLOW MAGENTA CYAN
Ngan G5-45 C8A61427MAY11
Citi2743 AReport_280x220mm OL_X4
9MAY’2011_5:30pm
CHAIRMAN’S
STATEMENT
WHAT IS TRULY HEARTENING IS THAT WHILE WE STAY TRUE TO OUR
BUSINESS MODEL OF KEEPING COSTS LOW, WE HAVE NOT DETRACTED
FROM PROVIDING THE HIGH-QUALITY SERVICE THAT WE PROMISE OUR
GUESTS – AS EXEMPLIFIED BY OUR WINNING THE WORLD’S BEST LOW
COST AIRLINE AWARD FOR THE SECOND YEAR IN A ROW.
DATO’ ABDUL AZIZ BIN ABU BAKAR
Chairman
PAGE >
58
AIRASIA BERHAD
ANNUAL REPORT
2010
Why do I say so? Just three statistics, among many, should suf?ce:
In 2010, just under nine years since we re-launched as a low-cost
carrier, AirAsia ?ew our 100 millionth guest. That’s 100 million people
who may not have taken to the skies if not for our low fares, our
route connectivity and our determination to ful?l our “Now Everyone
Can Fly” promise. In 2010, also, AirAsia recorded pro?ts of more
than RM1 billion. Let me repeat that: RM1 BILLION. We made a
higher pro?t than many corporations that have been listed on Bursa
Malaysia for much, much longer than we have. For our shareholders,
the year is historic as it’s the ?rst time the company is paying
out dividends, of 3 sen per ordinary share of RM0.10. This is an
additional re?ection of the company’s strong ?nancial performance.
I could go on about these achievements, but words are super?uous
when the facts speak for themselves.
Of course, it has not always been smooth cruising. We have hit
several turbulent patches along the way. Yet, with the commitment of
our people, and their ability to innovate, we have always been able to
overcome the challenges thrown our way. It is not without reason that
we call members of the simply amazing AirAsia family our Allstars.
DEAR FRIENDS,
IN MY STATEMENT IN THE 2009 ANNUAL REPORT, I
CONCLUDED WITH THESE REMARKS: “…I PLEDGE THAT
THERE WILL BE NO COMPLACENCY IN OUR FOCUS ON
ALWAYS EXCEEDING THE EXPECTATIONS OF OUR GUESTS
AND OUR STAKEHOLDERS.”
IT IS WITH GREAT PRIDE AND IMMENSE SATISFACTION THAT I
CAN SAY TODAY THAT WE HAVE KEPT OUR WORD. FOR 2010
WAS A STELLAR YEAR FOR THE GROUP – ONE THAT SAW THE
TINY AND LOSS-MAKING CONCERN THAT WAS AIRASIA WHEN
WE TOOK OVER IN DECEMBER 2001 ESTABLISH ITSELF
AS THE UNDOUBTED FAVOURITE OF THE PEOPLE AND A
MEMBER OF A VERY SPECIAL CORPORATE CIRCLE.
CHAIRMAN’S STATEMENT
PAGE >
59
AIRASIA BERHAD
ANNUAL REPORT
2010
What is truly heartening is
that while we stay true to our
business model of keeping costs
low, we have not detracted from
providing the high-quality service
that we promise our guests – as
exempli?ed by our winning the
World’s Best Low Cost Airline
award for the second year in a
row. The award is presented by
the respected London aviation
consultancy Skytrax, based on
the votes of nearly 18 million air
travellers worldwide. It proves
that our guests truly enjoy
travelling with us. Part of that, I
believe, comes from the fact that
we consistently seek to make
their travel experience hassle-
free through the creative use of
technology. We are constantly
improving on our IT systems to
make travel as convenient and
pleasant as possible. In 2010,
we introduced the concept of
self check-in as well as check-
in through the web, kiosk and
mobile. We also revamped our
reservation system to increase
its capacity and make it more
ef?cient for guests’ booking and
travel planning purposes.
Other than innovative IT, we also
offer our guests an exceptional
level of service. Our Allstars are
?red with a passion that’s hard to
?nd in any other organisation. We
continuously receive comments,
either via email or our live chat,
webmail or Twitter, on how
our people have gone beyond
the call of duty to iron out a
problem. The social media
is, in fact, a great channel
through which we are able to
obtain candid feedback from
our guests; and here again
we have proven to be beyond
compare among our peers. We
have more fans following us on
Facebook than any other airline
or transport company in the
region for that matter.
There’s yet another reason
why 2010 was a year to cheer.
In 2010, we established a
partnership to set up a venture
in the Philippines – further
expanding our network in
ASEAN and enabling us to
better serve this region many
of us call home. We believe
the potential is enormous for
our latest af?liate. At the same
time, we added several new
routes connecting the ASEAN
region with the wider global
community. We have grown
organically from a Malaysian to
an ASEAN airline with 10 hubs
in three countries in 2010,
adding two more hubs in 2011.
We have 132 routes – our
“sky bridges” -- that closely
link the diverse communities
and cultures of this 600
million-strong region. Based
on the simple premise of
FACTS AT A GLANCE
>
No. of Passengers
25.7
million for the group
democratising air travel, we have
helped promote local, regional
and international tourism that
has served to boost revenues in
ASEAN. AirAsia has brought in
more visitors to Malaysia than
any other airline, and now we
are doing the same for other
countries in the region. Our route
connectivity and fight frequency,
coupled with our low fares, also
serve as catalysts for economic
growth in other industries, hence
helping develop local economies.
I would like to take this
opportunity to thank our more
than 100 million guests for
placing their faith in AirAsia
and choosing us as their airline
of choice. Let me assure you
that your safety and comfort
are always our top priority. I
would also like to express deep
appreciation to my fellow Board
members for their contributions.
A heartfelt thank you as well
to our hard-working, creative
and passionate team of AirAsia
Allstars, under the exemplary
leadership of Group CEO
Dato’ Sri Dr. Tony Fernandes
and Deputy Group CEO Dato’
Kamarudin Meranun. We are who
we are today because of your
commitment and your dedication.
As we near the end of our ?rst
decade and prepare to enter
the next decade as a low-cost
carrier, I’m con?dent that we
are very well positioned to face
the challenges ahead. Let me
conclude, once again, with
a pledge from our Board of
Directors and the management:
AirAsia will continue to do
our utmost to exceed the
expectations of all our guests
and stakeholders.
Dato’ Abdul Aziz bin Abu Bakar
Non-Executive Chairman
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
60
AIRASIA HAS BROUGHT IN MORE VISITORS TO MALAYSIA
THAN ANY OTHER AIRLINE, AND NOW WE ARE DOING
THE SAME FOR OTHER COUNTRIES IN THE REGION. OUR
ROUTE CONNECTIVITY AND FLIGHT FREQUENCY, COUPLED
WITH OUR LOW FARES, ALSO SERVE AS CATALYSTS FOR
ECONOMIC GROWTH IN OTHER INDUSTRIES, HENCE
HELPING DEVELOP LOCAL ECONOMIES.
CHAIRMAN’S STATEMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
61
“ I’m so happy to be the
100 millionth guest to fy
AirAsia! Now Dato’ Sri Dr.
Tony Fernandes has even
given me 100 fights for
the next 100 years! This
is truly wonderful as I
fy frequently to India to
visit my husband who is
working there. ”
Our 100
millionth
guest
Irma Dewi
Indonesia
now everyone can fy
GROUP CEO’S
REPORT
IN 2002, OUR FIRST YEAR OF OPERATION AS AN LCC, WE FLEW
SOME 250,000 GUESTS. WE REACHED THE 50 MILLION MARK
IN 2008. JUST TWO YEARS LATER, WE DOUBLED THE FIGURE
TO 100 MILLION. THAT, IN A NUTSHELL, ENCAPSULATES OUR
PHENOMENAL GROWTH THIS LAST YEAR.
PAGE >
64
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP CEO’S REPORT
WHAT MAKES THE ACHIEVEMENT EVEN
MORE SATISFYING IS THAT OUR FINANCIAL
PERFORMANCE IS KEEPING PACE WITH OUR
AIRLINE’S GROWTH TRAJECTORY.... WE MADE
A PROFIT OF MORE THAN RM1 BILLION IN
2010, THEREBY JOINING AN EXCLUSIVE CLUB
IN THE CORPORATE WORLD.
DATO’ SRI DR. TONY FERNANDES
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
65
October 2010 will always have
a special place in the hearts of
all AirAsia Allstars. That month,
we got to meet Irma Dewi from
Jakarta. What’s so special
about Irma Dewi? Well, she
just happened to be the 100
millionth guest ferried by AirAsia
since we relaunched the airline
as a low-cost carrier (LCC) in
January 2002. Mull on that a
moment: in just under a decade,
our once little airline has carried
more than 100 million guests
– that’s three and a half times
the population of Malaysia, and
a sixth the entire population of
ASEAN. It’s 100 million people
who may not have taken to the
air if not for our low fares, the
connectivity of our routes and
the ease of travel we offer as
part of our high-quality service.
The low fares are self-
explanatory. But AirAsia’s
connectivity is fast becoming
our signature trademark – going
boldly where other airlines
rarely, if ever, venture. Irma
demonstrates this perfectly. She
lives in Jakarta, her husband
works in Tiruchirappalli (Trichy)
in India. No ASEAN airline ?ew
to Trichy until we decided to do
so from Kuala Lumpur. With our
low fare, we provided Irma the
opportunity to spend quality
time with her husband, ?ying
from Jakarta to Kuala Lumpur
on one of our many ?ights
between the two ASEAN capitals
and connecting to Trichy.
Thinking back, it almost seems
surreal what we’ve achieved. In
2002, our ?rst year of operation
as an LCC, we ?ew some
250,000 guests. We reached
the 50 million mark in 2008.
Just two years later, we doubled
the ?gure to 100 million. That,
in a nutshell, encapsulates our
phenomenal growth this last
year.
What makes the achievement
even more satisfying is that
our ?nancial performance is
keeping pace with our airline’s
growth trajectory. As outlined in
detail below, we made a pro?t of
more than RM1 billion in 2010,
thereby joining an exclusive club
in the corporate world. AirAsia
was a loss-making concern
owned by a government-linked
company when we took it over
in December 2001. Now, in
just under a decade, we’re a
company that made RM1 billion
in 2010. Again, take a moment
to savour that fact.
Our growth has been possible
because we are single-minded
in our pursuit of the short-haul,
point-to-point, high-turnaround
model that allows us to keep
costs low while pushing the
boundaries of ef?ciency and
productivity. Because of our
determination not to stray
from this course, we made the
strategic decision in 2010 to
let our sister airline AirAsia X,
which has grown its own very
successful model for long-haul
travel, leave the nest. While we
will still share the same website
and branding, and feed off each
other’s routes for the bene?t of
our guests, AirAsia X will operate
its own ?eet, with its own crew,
under its own management
who are now based in their own
corporate premises.
AirAsia continues to hold the
distinction of having the lowest-
cost operations in the world,
enabling us to offer our guests
the lowest fares. Our emphasis
on keeping costs low does
not, however, detract from our
commitment to the highest
levels of safety and service. We
have an excellent safety record
and an on-time performance
that’s improved signi?cantly
since we began converting our
FACTS AT A GLANCE
>
No. of Aircraft
90
>
No. of Airbus A320s
86
A MAJOR CONTRIBUTOR TOWARDS
THE GROUP’S SIGNIFICANT INCREASE IN
THE BOTTOM LINE WAS THE CONVERSION
OF THE FLEETS IN THAILAND AND
INDONESIA FROM BOEING B737 TO THE
MORE FUEL-EFFICIENT AIRBUS A320.
Boeing B737 ?eet to Airbus
A320s. Incidentally, our ?eet of
90 aircraft is the largest among
LCCs in Asia and second largest
among all ASEAN carriers,
behind only Singapore Airlines.
What’s more, we’re not just the
best airline for people looking
at affordable air travel; we’re
also one of the best airlines to
invest in.
To think we’ve come this far
in the relatively short space
of nine years is, to be honest,
something that’s dif?cult for
me to put into words. As I’ve
emphasised in all our previous
annual reports, we would not
be where we are today if not
for the outstanding group of
people who make AirAsia work.
Our more than 8,000 Allstars
have proven time and again that
with determination, passion,
creativity and courage, we can
achieve anything. Our dream
has always been to serve the
underserved. Our 100 millionth
guest proves we’ve achieved
that. Now, truly, everyone can ?y.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
66
AIRASIA’S REVENUE INCREASED FROM
RM3.13 BILLION IN 2009 TO RM3.95
BILLION IN 2010. OUR PROFIT BEFORE TAX
(PBT) RECORDED A 77% GROWTH FROM
RM622.23 MILLION TO RM1.10 BILLION.
THESE RESULTS ARE ALL THE MORE
MEANINGFUL GIVEN THAT THE PRICE OF
OIL AVERAGED US$91.8 PER BARREL IN
2010 AS COMPARED TO US$70.4 PER
BARREL IN 2009, AND WE HAD GROWN
OUR FLEET FROM 84 TO 90 AIRCRAFT.
GROUP CEO’S REPORT
PAGE >
67
AIRASIA BERHAD
ANNUAL REPORT
2010
OUR MORE THAN 8,000 ALLSTARS HAVE PROVEN TIME AND AGAIN THAT WITH DETERMINATION,
PASSION, CREATIVITY AND COURAGE, WE CAN ACHIEVE ANYTHING. OUR DREAM HAS ALWAYS BEEN
TO SERVE THE UNDERSERVED. OUR 100 MILLIONTH GUEST PROVES WE’VE ACHIEVED THAT. NOW,
TRULY, EVERYONE CAN FLY.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
68
GROUP CEO’S REPORT
FINANCIAL PERFORMANCE
After two painful years experienced
by the aviation industry, the
recovering economy in 2010
revived ?agging performances
in general. Thanks to our strong
fundamentals and unique
business model, we were very well
positioned to take advantage of
the economic turnaround, allowing
us to really soar.
AirAsia’s revenue increased from
RM3.13 billion in 2009 to RM3.95
billion in 2010. Our pro?t before
tax (PBT) recorded a 77% growth
from RM622.23 million to RM1.10
billion. These results are all the
more meaningful given that the
price of oil averaged US$91.8 per
barrel in 2010 as compared to
US$70.4 per barrel in 2009, and
we had grown our ?eet from 84 to
90 aircraft.
The ?eet conversion in Thailand
and Indonesia from Boeing B737s
to the more fuel-ef?cient Airbus
A320s contributed towards our
pro?ts. It also meant the two
operations turned pro?table for
the ?rst time. We celebrated
AirAsia Thailand’s full conversion
in November 2010, and hope to
do the same for our Indonesian
af?liate by 2012, upon completion
of the runway upgrade in Bandung.
As of end 2010, AirAsia Indonesia
had four remaining Boeing B737s.
AirAsia’s performance was also
boosted by increased revenue
from our ancillary services.
We managed to increase the
average spend per guest with an
expanded range of services and
enhanced product offerings. Cargo
and courier services also grew
substantially, posting a revenue
of RM121.35 million in 2010 as
compared to RM79.79 million in
2009. I am also pleased to see
a stronger take-up in our in?ight
meals and beverage, which
defnes the quality of products
that we provide. As most of
the ancillary initiatives come
at minimal cost, the revenue
generated could easily be passed
through to our bottom line.
In terms of our ?nancial
fundamentals, 2010 was notable
in that the Group managed to
decrease our gearing from 2.61
times in 2009 to 1.74 times,
further endearing us in the eyes
of analysts. At the same time,
our Thai and Indonesian af?liates
continued to repay the amount
due to AirAsia, reducing by more
than half their combined debt from
RM823 million to RM376 million.
HIGHLIGHTS OF THE YEAR
Internally, in 2010, we improved
on the design of our booking
system to make it more
convenient for use of guests.
New Skies, as the state-of-the-
art navigation system is called,
literally takes our reservation
capabilities to new heights.
It is able to cope with up to
a million online reservations
a day and allows passengers
to search for the lowest fare
available for their trips, while
also enabling them to book
seats for multi-cities in one
transaction. Operational savings
accrued from this system will
be passed on to guests in
terms of attractive promotions
and discounts. What is most
impressive about New Skies is
>
No. of Hubs
10
in 3 countries
(2 added in 2011)
>
No. of Routes
132
the time it took to implement.
Working round the clock, and
with an uncommon zeal so
typical of AirAsia, our Allstars
managed to get the system up
and going within nine months. In
other major airlines, I’m told, the
same process would have taken
18 to 24 months. Once again,
kudos to our Allstars.
The system upgrade paid
almost immediate dividends.
A month after New Skies was
operational, we launched a
Mind Blowing Fare campaign,
offering international and
domestic ?ights for only RM1.
During the previous free ticket
campaign, in November 2009,
we achieved record sales of
390,000 bookings on the ?rst
day, but also had to contend
with the system repeatedly
crashing. This time, we sold
538,000 tickets the ?rst day of
the campaign. And the system
didn’t register even a blip. We
also set a new record of 36,871
seats sold in an hour, 47.5%
more than the previous one-hour
sales record of 25,000 seats.
Further improving the customer
experience, we introduced self
check-in kiosks at some of our
airports, as well as the ability to
check in via the web or internet-
enabled mobile phones to
minimise the hassle of queuing
at check-in counters. We also
expanded our menu so that it
now offers healthier options
including vegetarian meals,
taking into account the cultural
and religious mores of the
diverse Asian communities.
PAGE >
69
AIRASIA BERHAD
ANNUAL REPORT
2010
MAINSTREAMING OUR
ANCILLARY INCOME
Ancillary income is important to
AirAsia as it acts as a natural
hedge against ?uctuations
in the price of oil. Every RM1
spent by a guest on ancillary
items effectively acts as a
buffer against a US$1 per barrel
increase in the price of oil.
Needless to say, the more guests
we carry, and the more they
spend, the higher our ancillary
income. Every year, we have
managed to carry an increasing
number of guests, as re?ected in
our passenger load. In 2010, the
Group’s combined passenger load
increased to 78% from 75% in
2009, or to 25.68 million guests
from 22.70 million guests. Every
year, also, we have managed to
increase the amount each guest
spends on items like excess
baggage, picking their seat, food
and beverage on ?ights and travel
insurance. In 2010, ancillary
income per guest increased to
RM44.
In true AirAsia style, we have
been very strategic in developing
our ancillary initiatives, making
as much use as possible
of our existing IT or aircraft
infrastructure to ensure a steady
and signi?cant income stream
at low, or no, cost to us. For
example, in 2010, we made use
of our IT expertise to launch two
online initiatives - AirAsiaRedTix.
com and AirAsiaMegastore.com.
AirAsiaRedTix.com, which made
its debut on 8 March 2010,
provides guests and fans access
to some of the best music, sports
and entertainment events around
the world. The AirAsiaMegastore.
com, as its name implies, is an
online portal where the public can
buy AirAsia collectibles as well as
items from merchant partners,
ranging from fashion and lifestyle
products to travel paraphernalia,
computers, IT gadgets, books,
CDs and even home décor and
appliances.
We also made better use of
our aircraft belly space to
carry more cargo. We have a
natural advantage over other
cargo operators given that our
operational cost is the lowest in
the world and we can therefore
offer cheaper cargo rates. We
also fy extensively and frequently
around the region and therefore
can deliver more quickly. To
service markets we don’t as
yet cover, our enterprising team
formed agreements with other
airlines. As a result of these
initiatives, our cargo services
grew signi?cantly in 2010, and we
EVERY YEAR, ALSO, WE HAVE MANAGED
TO INCREASE THE AMOUNT EACH GUEST
SPENDS ON ITEMS LIKE EXCESS BAGGAGE,
PICKING THEIR SEAT, FOOD AND BEVERAGE
ON FLIGHTS AND TRAVEL INSURANCE.
IN 2010, ANCILLARY INCOME PER GUEST
INCREASED TO RM44.
were even named the Air Cargo
Industry Newcomer of the Year
2010 at the ACW World Air Cargo
Awards in Shanghai. AirAsia is the
?rst low-cost carrier to win this
award.
EXPANSION & THE ASEAN
CONNECTION
A consistent focus at AirAsia
has been to grow our network
of routes and to increase the
frequency of fights on the more
popular ones, i.e. those with
passenger loads of more than
80%. We managed to do both in
2010.
Last year, AirAsia Indonesia’s
target was to further expand
its international network.
Accordingly, it launched new
routes such as Bali-Darwin,
Medan-Kuala Lumpur, Surabaya-
Bangkok and Surabaya-Penang.
AirAsia Thailand, meanwhile,
launched a ?rst by linking two
paradise destinations, Phuket
and Bali, allowing sun-and-
sea-seekers to hop from one
beach paradise to another
on a convenient, affordable
AirAsia ?ight. Our Thai af?liate
also launched the ?rst Phuket-
Ubon Ratchatani route, and
strengthened its links with
PAGE >
70
AIRASIA BERHAD
ANNUAL REPORT
2010
NO CHARGE on cash withdrawals
when using your Maybank ATM
card at any Maybank ATM in any
of these countries.
BANKING
ACROSS
BORDERS
Singapore Philippines Indonesia Brunei Cambodia
C
M
Y
CM
MY
CY
CMY
K
MAYB002•MME Promo 28x22cm.pdf 1 5/5/11 11:33 AM
www.shlegal.com
One Raffes Place #12-00
Singapore 048616
T: + 65 6226 1600
F: + 65 6226 1661
Stephenson Harwood is proud to be associated with AirAsia - one of Asia’s leading carriers
and an important member of the frm’s international stable of clients.
As an award-winning full service international law frm, with one of the largest and most
respected Aviation practices in Asia, we advise on areas such as aviation fnance and
leasing; litigation and risk and aero-political matters.
Our skill and excellence in these areas underscore a steadfast commitment to delivering
our clients the highest quality service.
Stephenson Harwood Congratulates
on Another Year of Flying High
Aircraft Finance
Law Firm of the Year
Jane’s Transport Finance Awards 2010
Aviation Law Firm of the Year
Finance Monthly Global Awards 2011
International Law Offce
Client Choice Award 2010
for the Aviation category
AirAsia
Photo by Paul Ng on AirAsia
Contact
GROUP CEO’S REPORT
IN TOTAL, WE ADDED 18 NEW ROUTES IN
2010, MOST OF WHICH FURTHER ENRICHED
OUR INTRA-ASEAN NETWORK, THE OTHERS
CONNECTING OUR 10 ASEAN HUBS WITH
POPULAR DESTINATIONS SUCH AS HONG
KONG, TAIPEI, DARWIN AND CHINA.
India via ?ights from Bangkok
to Kolkata and Delhi. India was,
in fact, one of our hot zones
in 2010; we launched ?ve new
routes to Bangalore, Chennai
and Kolkata from Kuala Lumpur,
Penang and Bangkok, offering
a total of 134 weekly ?ights
to this emerging economic
powerhorse. India is an
attractive destination for us not
least because of its population
of over 1.1 billion, many of
whom are desirous to travel.
In total, we added 18 new
routes in 2010, most of which
further enriched our intra-ASEAN
network, the others connecting
our 10 ASEAN hubs with popular
destinations such as Hong
Kong, Taipei, Darwin and China.
In keeping with our promise
to be Truly ASEAN, AirAsia is
in the process of setting up a
new af?liate in the Philippines.
Through our fully-owned
subsidiary AA International Ltd,
we’ve formed a partnership with
a group of individuals in the
Philippines - Antonio Cojuangco
Jr., Dr. Michael Romero and
Marianne Hontiveros - to
establish a low-cost airline in
which we will own 40% equity.
We are looking forward to this
new venture, targeted to start
at end 2011, as we believe the
Philippine market is ripe for a
low-cost carrier serving both
domestic and international
routes. In fact, we believe
the ASEAN region as a whole
presents great potential for
further expansion of the AirAsia
franchise. The establishment of
more regional af?liates will be
an overarching theme to guide
our onward journey in the years
to come as we strive to serve
the 600 million-strong region we
all call home.
BRANDING OR BUILDING
LOCAL HEROES
AirAsia has successfully
increased our visibility and
built a world-renowned brand
by association with high-pro?le
sports such as football, motor
racing and basketball. In 2010,
we further strengthened our
branding initiatives by assuming
two key title sponsorships - for
the 2010 AirAsia British Grand
Prix at Silverstone and for the
ASEAN Basketball League’s
2010/2011 season. Towards the
end of the year, we signed up an
exclusive three-year sponsorship
deal with the champions of the
previous season - the Philippine
Patriots - who will act as towering
ambassadors for the AirAsia
brand.
Collaborating with the Sepang
International Circuit (SIC), we
put a Malaysian team - the Team
AirAsia-Sepang International
Circuit - in the 2010 MotoGP
World Championships. Of the
two riders, Muhammad Zulfahmi
Khairuddin is Malaysian, and
we are providing all the support
possible to develop his racing
?nesse. Our objective, in addition
to the mileage we get from these
sporting events, is to groom
local ASEAN sports heroes.
With this in mind, in 2010, we
also established the AirAsia-
Team Lotus Driver Development
Program under which we have
recruited seven young aspiring
racers from ASEAN as well as
the UK, USA and Denmark.
These racers will be given the
best training in the hope of our
uncovering some future stars.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
73
AIRASIA HAS SUCCESSFULLY INCREASED OUR
VISIBILITY AND BUILT A WORLD-RENOWNED BRAND
BY ASSOCIATION WITH HIGH-PROFILE SPORTS SUCH
AS FOOTBALL, MOTOR RACING AND BASKETBALL.
ENTER THE NEW DECADE
After a year in which the global
airline industry picked up pace
again, the forecast for 2011 in
general is good, with an element
of caution. The global economy
is anticipated to continue to
improve; however political
uncertainties in the Middle East,
and the concomitant increase in
oil price, could put a damper on
the industry. IATA expects rising
oil prices to offset the increase
in demand for air travel, halving
global airline net pro?ts to
1.4% as compared to 2.9%
in 2010. In addition, airlines
face the possibility, as always,
of weakened demand for air
travel in the event of any natural
disasters.
At AirAsia, we have always
demonstrated a capability to
cope successfully with any
challenge that comes our way.
We do not whinge and moan
about the externalities we
cannot control; instead, we
focus on improving ourselves
from within so as to transcend
the perils of the moment and
emerge stronger. Hence, we
are closely monitoring the
volatility in oil prices, but
we are also taking proactive
measures that minimise the
impact on our costs (and,
thus, our low fares for guests).
We were the ?rst airline to
remove the fuel surcharge in
November 2008, and even
while others maintained, or
even increased, this surcharge
with rising oil prices, we were
loath to follow suit. Reluctantly,
however, we acknowledge that
it would be irresponsible in our
management of the company
if we continue to avoid doing
so. Thus, we have re-imposed
the fuel surcharge, but on a
graduated scale depending
on the length of the ?ight and
in a manner that still helps to
keep our fares lower than other
airlines.
We have been through so many
turbulent phases in the past
that we now have a stress-
tested senior management
team in place – one that is
exceptionally capable of leading
our Allstars in overcoming
the challenges we face.
Every stormy period we have
survived has strengthened the
foundation on which we are
built and will serve us well in
our management of AirAsia.
lndeed, we are con?dent enough
of our fundamentals that we
are going ahead with plans to
acquire eight new aircraft in
2011, the ?nancing for which
has already been secured. If
anything, we look forward to
further expansion into ASEAN,
aided by further liberalisation of
regional routes under the ASEAN
Open Skies Agreement. In short,
we are optimists here at AirAsia
– but it’s an optimism tempered
by reality.
As always, I thank our Allstars
for their dedication, hard work
and enthusiasm, which have
kept the AirAsia ?ag, and planes,
?ying. We have over 8,000
creative minds from all over
ASEAN and beyond working with
us, inspiring the management
with fresh ideas and challenging
us continuously to reinvent
ourselves. To our Allstars, a
heartfelt thank you for all that
you do. I would also like to
thank our Board of Directors,
and especially our Chairman, for
continued guidance and wisdom.
And, of course, a heartfelt
thanks to our shareholders,
our suppliers and all our other
stakeholders for their support.
I believe we have built a
phenomenal brand here
together with the whole Allstar
team in our ?rst decade of
operations. Having laid such a
solid foundation, we are quietly
con?dent of the potential and
possibilities of the Group in
our next decade of operations,
which I am truly excited to be a
part of.
GROUP CEO’S REPORT
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
75
We received accolades for being the largest low-cost
airline operating into Changi. In fact, Singapore’s Changi
Airport serves as a major virtual hub for AirAsia Group’s
fights to destinations in Malaysia, Thailand and Indonesia.
Merlion Park, Singapore
Thailand
N.Korea
Bangladesh
India
Sri Lanka
Indonesia
Philippines
Cambodia
Laos
Vietnam
Pakistan
Myanmar
Ireland
London
Tehran
Bali
Yogyakarta
Balikpapan
Solo
Jakarta
Padang
Pekanbaru
Medan
Hat Yai
Narathiwat
Phuket
Ho Chi Minh
Phnom Penh
Siem Reap
Vientiane
Hanoi
Dhaka
Macau
Hong Kong
Shenzhen
Guangzhou
Guilin
Hangzhou
Shanghai
Chengdu
Tianjin
Seoul
Beijing
Tiruchirappalli
Bangalore
Mumbai
New Delhi
Sandakan
Tawau
Miri
Sibu
Kota Bharu
Alor Setar
Bandung
Surabaya
Yangon
Kochi
Kolkata
Chennai
Taipei
Kota Kinabalu
Labuan
Singapore
Johor Bahru
Kuching
Brunei
Bintulu
Palembang
Taiwan
Colombo
Banda Aceh
Iran
Uzbekistan
Afghanistan
Malaysia
Langkawi
K.Terengganu
Krabi
France
Spain
Italy
Germany
United
Kingdom
Ireland
London
Paris
Gold Coast
Perth
New Zealand
Australia
New
Zealand
Tokyo
Melbourne
Christchurch
Makassar
Chiang Mai
Chiang Rai
Penang
S.Korea
Afghanistan
China
Bhutan
Nepal
Mongolia
Iran
Indian Ocean
Japan
Clark
AIRASIA
LEGEND
AIRASIA X
Hub
Darwin
Bangkok
Lumpur
Kuala
CONNECTING
ASEAN AND
BEYOND
PAGE >
78
Thailand
N.Korea
Bangladesh
India
Sri Lanka
Indonesia
Philippines
Cambodia
Laos
Vietnam
Pakistan
Myanmar
Ireland
London
Tehran
Bali
Yogyakarta
Balikpapan
Solo
Jakarta
Padang
Pekanbaru
Medan
Hat Yai
Narathiwat
Phuket
Ho Chi Minh
Phnom Penh
Siem Reap
Vientiane
Hanoi
Dhaka
Macau
Hong Kong
Shenzhen
Guangzhou
Guilin
Hangzhou
Shanghai
Chengdu
Tianjin
Seoul
Beijing
Tiruchirappalli
Bangalore
Mumbai
New Delhi
Sandakan
Tawau
Miri
Sibu
Kota Bharu
Alor Setar
Bandung
Surabaya
Yangon
Kochi
Kolkata
Chennai
Taipei
Kota Kinabalu
Labuan
Singapore
Johor Bahru
Kuching
Brunei
Bintulu
Palembang
Taiwan
Colombo
Banda Aceh
Iran
Uzbekistan
Afghanistan
Malaysia
Langkawi
K.Terengganu
Krabi
France
Spain
Italy
Germany
United
Kingdom
Ireland
London
Paris
Gold Coast
Perth
New Zealand
Australia
New
Zealand
Tokyo
Melbourne
Christchurch
Makassar
Chiang Mai
Chiang Rai
Penang
S.Korea
Afghanistan
China
Bhutan
Nepal
Mongolia
Iran
Indian Ocean
Japan
Clark
AIRASIA
LEGEND
AIRASIA X
Hub
Darwin
Bangkok
Lumpur
Kuala
AirAsia is not only the world’s best low-cost
airline, it is also the world’s only truly ASEAN
(Association of Southeast Asian Nations)
airline. No other carrier - either low-cost or
legacy - offers the kind of connectivity in
ASEAN that we do, opening up avenues for
the region’s 600 million people, and linking
them in ways that were not possible before.
NOW EVERYONE
CAN FLY TO MORE THAN
65 DESTINATIONS
ACROSS 3 CONTINENTS
No. of Routes Served by AirAsia Group and AirAsia X
2003 11
2004 26
2005 52
2006 65
2007 75
1
2008 108
4
2009 126
9
2010 132
13
AirAsia Group AirAsia X
2003
7 13
4
6
10
12
17
20
2
6
8
14
16
1
3
8
19 26 34 44 48
2004
Malaysia Thailand Indonesia AirAsia X
2005 2006 2007 2008 2009 2010
Total Now
11
19
18
53
Number of Aircraft for AirAsia Group and AirAsia X
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
79
We have built what we call
sky bridges, connecting
communities from each of the
10 ASEAN nations, namely
Malaysia, Thailand, Indonesia,
Vietnam, the Philippines, Laos,
Cambodia, Myanmar, Brunei
and Singapore. Among these
sky bridges are some that are
unique to AirAsia, creating
new connections and opening
new possibilities for local
communities.
Of the 25.7 million guests ?own
in 2010, close to 65% were
from ASEAN. It comes as little
surprise that our 100 millionth
guest, whom we celebrated in
October 2010, was a young lady
from the region. Irma Dewi is
Indonesian.
AirAsia is the only airline with
hubs in three countries, all in
ASEAN. We have operational
bases in Kuala Lumpur, Kuching,
Penang and Kota Kinabalu in
Malaysia; Bangkok and Phuket
in Thailand; and Jakarta, Bali,
Bandung and Surabaya in
Indonesia. In 2011, we have
added Chiang Mai and Medan
as new hubs in Thailand and
Indonesia, respectively, and will
be opening a new hub in Clark,
the Philippines, towards year
end.
Singapore, meanwhile, has
grown into a virtual hub in just
two years since we were given
the rights to ?y to the island
republic in 2008, following the
ASEAN Open Skies agreement.
Previously served out of
Bangkok by AirAsia Thailand,
Singapore is now connected to
four destinations in Indonesia,
six in Malaysia and three in
Thailand. The AirAsia Group
is the largest low-cost carrier
operating in Singapore in
terms of fight frequency,
with more than 203 ?ights a
week departing from Changi
Airport. AirAsia’s contribution to
passenger traf?c at Changi was
recognised when it was named
one of the top airlines in the
passenger carriage category by
the Changi Airport Group.
Why ASEAN? Quite simply,
because it’s our home. And it’s
a home base that offers huge
potential in terms of growth.
The region comprises one of the
fastest growing middle-income
populations in the world, with
a combined GDP of US$1.5
trillion. It is also a region ripe for
air travel given that most of the
countries are separated by vast
bodies of water.
While AirAsia promotes intra-
ASEAN travel like no other
airline, we are also connecting
the region and its people to
the rest of the world. In 2010,
PAGE >
80
AIRASIA BERHAD
ANNUAL REPORT
2010
AirAsia added 23 new routes,
both within ASEAN as well as
between ASEAN and key cities in
the Asia Paci?c. In the process,
we are promoting tourism and
trade and helping develop local
economies in other ways.
The setting up of af?liates in
Thailand in 2003 and Indonesia
in 2004 provided a veritable
boost to the local economies of
these countries.
AirAsia’s various sports
sponsorships reinforce our
branding as an ASEAN airline,
while promoting regional
sporting events and contributing
to the development of local
sports heroes. We have
promoted Asians in the MotoGP,
in basketball and in Formula
1 racing. We also support
the arts and culture of the
region, highlighting events in
our monthly in?ight magazine
Travel3Sixty and promoting local
artistes in any way we can. In
February 2010, we launched
the AirAsia Limited Edition Truly
ASEAN Collection of postcards,
coasters and notebooks with
distinctive designs by artists
from all 10 ASEAN countries.
Within AirAsia itself, we have
actively recruited staff from
across ASEAN. These Allstars
serve as a continuous reminder
to our guests and to us at
AirAsia that we all belong to
one huge family - that vibrant,
colourful, diverse family called
ASEAN.
PAGE >
81
AIRASIA BERHAD
ANNUAL REPORT
2010
In 2010, AirAsia Thailand increased its capacity
by taking delivery of eight new A320 aircraft
to become a full-fedged Airbus carrier with a
feet size of 19 aircraft. Which means the airline
helped over 5.7 million guests from Thailand to
reach new destinations such as India, China and
other unchartered ASEAN destinations.
Wat Arun Temple, Bangkok, Thailand
THAILAND >>
CELEBRATING
A NEW ALL-A320
FLEET
THE YEAR SAW AIRASIA THAILAND ADD SIX NEW
ROUTES TO ITS EXISTING 26, INCREASING ITS NETWORK
CONNECTIVITY TO 32 DESTINATIONS.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
84
The year 2010 was a turning
point for AirAsia Thailand. It
was the year in which the airline
completed its conversion to an
all-Airbus A320 ?eet and when
the six-year-old company turned
pro?table.
AirAsia Thailand increased its
revenue 33% to THB12.39
billion, while improved
operational ef?ciencies led
to a net pro?t of THB2.85
billion, representing growth of
452% from 2009. The results
point to superior management
and performance, especially
impressive given the political
unrest in the country as well
as devastating ?oods that
brought Thailand to a standstill
in October. AirAsia Thailand also
continued to record strong load
factors, which it attributes to
abiding by its promise to always
put its guests ?rst.
An in-depth documentary aired
on Thai TV following a media
trip to Toulouse went a long way
towards boosting the image of
AirAsia Thailand. Passengers
now equate the airline with
brand-new, quality aircraft and
realise that they are getting
real value for money by ?ying
the low-cost carrier. A total of
5.7 million guests ?ew on the
airline in 2010, marking an
increase of 14% year-on-year, and
contributing to an average load
factor of 78%, up from 76% in
2009.
>
Revenue
THB12.39bil
>
Net Pro?t
THB2.85bil
PAGE >
85
AIRASIA BERHAD
ANNUAL REPORT
2010
Greater operational ef?ciencies
derived from the ?eet conversion
led to signi?cantly fewer ?ight
delays, while the fuel-ef?cient
aircraft also reduced costs to a
considerable degree, adding to
the company’s bottom line. At
the same time, AirAsia Thailand
upgraded its online systems
to facilitate guest bookings,
and created greater passenger
convenience by introducing
self check-in kiosks as well as
web check-in facilities. These
customer-centric innovations
were supplemented by attractive
promotions. Although its
average fare increased 9%
from THB1,656 to THB1,804,
this was primarily due to more
international ?ights. Taken
as a whole, AirAsia Thailand
succeeded in keeping its fares
low. All these changes were
appreciated by guests, as
re?ected in the numbers.
In 2010, the airline enhanced
its customer relationship
management by launching the
AirAsia Thailand Facebook fan
page which enables news of
promotions and other exciting
updates to spread very quickly.
Allstars are encouraged to use
the social media to create a
stronger AirAsia brand throughout
Thailand; even CEO Tassapon
Bijleveld contributes to this via
his personal Twitter account.
The year saw AirAsia Thailand
add six new routes to its existing
26, increasing its network
connectivity to 32 destinations.
Notably, the airline has started
tapping into the Indian market
by opening routes to Kolkata
and New Delhi which proved
so popular that within two
weeks of their launch, the ?ight
frequencies were increased to
daily. The airline also created a
?rst by linking two popular ASEAN
tourist destinations, Phuket
and Bali, while adding to the
travel convenience of Thais and
visitors to Thailand by linking for
the ?rst time Phuket with Ubon
Ratchathani and by introducing
?ights between Phuket and Udon
Thani.
Having strengthened its
network and increased its
passenger load, AirAsia Thailand
managed to further increase
its market share in terms of
LCC passengers carried at
Suvarnabhumi Airport to 56%
in 2010.
Prospects
In 2011, AirAsia Thailand will
concentrate on building both
its domestic and international
networks, with a particular
focus on China. To support its
route expansion, the airline is
increasing its ?eet and is to
receive three more A320s in
2011, the ?rst of which was
delivered in January. The other
two will be delivered in the third
and fourth quarters.
At the same time, the airline
plans to build its brand via more
strategic corporate responsibility
initiatives, focusing on giving
back to society using its key
strengths in air transport and
connectivity. The airline aims
India
China
New Delhi
Kolkata
Taiwan
China
Bangladesh
Philippines
Malaysia
Laos
Vietnam
Myanmar
Indonesia
Thailand
Jakarta
Singapore
UdonThani
Hanoi
Chiang Mai
Chiang Rai
Shenzhen
Guangzhou
Yangon
Kuala
Lumpur
Kota
Kinabalu
Bangkok
Cambodia
Indian Ocean
Phuket
Hong Kong
Bali
Narathiwat
Ho Chi Minh
Phnom Penh
Krabi Nakhon Si Thammarat
Penang
Hat Yai
Macau
Ubon Ratchathani
Surat Thani
>
No. of Guests
5,704,832
>
No. of Destinations
32
>
No. of Hubs
2
(1 added in 2011)
to connect people, goods,
knowledge and aid supplies
when needed. It also plans to
be more actively involved in local
communities and festivities as
well as in sports and concert
sponsorships.
Tassapon Bijleveld
Chief Executive Of?cer
AirAsia Thailand
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
86
With four hubs in Indonesia and adding new destinations
in other ASEAN countries, AirAsia Indonesia is poised
to increase passenger traffc throughout the region. In
fact, by striking the right balance between domestic and
international routes, which is key to increasing yield and load
factor, the airline few close to four million guests in 2010.
Borobudur, Java, Indonesia
In 2010, AirAsia Indonesia had
a ?eet of 18 aircraft operating
out of four hubs in Jakarta,
Bali, Bandung and Surabaya.
It added a ?fth hub - Medan
- in 2011. While serving key
domestic routes, the airline has
been focusing on developing
its international network which
now reaches out to Singapore,
Malaysia, Australia and Vietnam.
As part of an aggressive
international route expansion
plan, it launched three new
international routes, Surabaya–
Bangkok, Surabaya–Penang and
Bali–Darwin, and also added one
more daily ?ight for high-yield
international routes such as
Surabaya–Kuala Lumpur, Bali–
Kuala Lumpur and Bali–Perth.
Bali has been a phenomenal
hit among Australians as it is
seen as an affordable paradise
destination for the middle class,
and this has contributed to the
four daily ?ights from Perth.
These initiatives contributed to
an increase in the number of
passengers ?own, 70% of whom
were international guests.
A positive development in
its vision to spread its wings
internationally was recognition
by the European Union of AirAsia
Indonesia’s compliance with
international safety standards
and practices. This led to the EU
of?cially lifting a ban on AirAsia
Indonesia in July 2010, and
opening the European market to
this ambitious airline.
In addition to its international
expansion, AirAsia Indonesia
connected Surabaya with Medan
and increased the frequency of
the popular Jakarta-Bali route
during weekends and the holiday
seasons.
AirAsia Indonesia recorded a
revenue of IDR2,764 billion
in 2010, up by 37% from
IDR2,016 billion achieved in
2009. Despite a hike of 15%
in average base fares, the
number of passengers carried
increased 13% year-on-year
to 3,921,039, while its load
factor rose 3 percentage points
to 77%. The airline grabbed
a 41.19% market share in
international travel, making it
the leading international airline
in the country. Ancillary income
revenue contributed signi?cantly
to the airline’s bottom line,
growing 81% year-on-year,
with an average spend per
passenger of IDR123,308. For
the full year, AirAsia Indonesia
generated IDR474.41 billion
in net pro?t, recording growth
351% year-on-year.
AS PART OF AN AGGRESSIVE INTERNATIONAL ROUTE EXPANSION PLAN, IT
LAUNCHED THREE NEW INTERNATIONAL ROUTES, SURABAYA–BANGKOK,
SURABAYA–PENANG AND BALI–DARWIN, AND ALSO ADDED ONE MORE DAILY
FLIGHT FOR HIGH-YIELD INTERNATIONAL ROUTES SUCH AS SURABAYA–
KUALA LUMPUR, BALI–KUALA LUMPUR AND BALI–PERTH.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
90
INDONESIA >>
TRULY
INTERNATIONAL
AIRLINE
>
Revenue
IDR2,764bil
>
Net Pro?t
IDR474.41bil
PAGE >
91
AIRASIA BERHAD
ANNUAL REPORT
2010
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
92
The airline focused largely
on innovation to improve its
performance. Among the
customer-centric innovations
introduced in the year were
applications that enable guests
to book their ?ights on their
smart phones as well as to self
check-in using mobile phones
or at self check-in kiosks in the
airport. AirAsia Indonesia also
connected more positively and
effectively with passengers via
the social media. In 2010, it
launched Facebook and Twitter
accounts, both of which have
proven to be very popular.
To promote both its international
and domestic routes, the airline
organised two travel fairs in
2010 - in Jakarta and Surabaya
- which attracted over 20,000
visitors and 18,000 visitors,
respectively. Motivated by the
success of these, the airline has
plans for road shows in Jakarta,
Bandung and Surabaya in 2011.
AirAsia Indonesia was named
Best Low Cost Airline at the
2010 Indonesia Tourism Award
on 2 December 2010. The
airline attributes the award, and
its many other successes, to its
people and its culture of open
communication.
Prospects
As of 1 January 2011 the
Indonesian Government has
removed the requirement for
Indonesians to either pay ?scal
(income tax prepayment) or
produce their tax registration
at the airport prior to leaving
the country. This has resulted
in an increase in international
travel, as re?ected in AirAsia
Indonesia’s sales and will
contribute signi?cantly to
continued expansion of the
airline’s international network.
Hong Kong
Thailand
Philippines
Malaysia
Cambodia
Laos
Vietnam
Myanmar
Perth
Darwin
Makassar
Solo
Padang
Pekanbaru
Bangkok
Ho Chi Minh
Bandung
Phuket
Penang
Bali
Indonesia
Australia
Singapore
Kuala
Lumpur
Indian Ocean
Banda Aceh
Medan
Surabaya
Yogyakarta
Jakarta
In 2011, AirAsia Indonesia
intends to strengthen all its
hubs, especially Bali and
Bandung, while fortifying
its position as a ‘?rst-class
low-cost airline’. As part of a
brand enhancement campaign,
the airline is creating greater
awareness of its predominantly
Airbus A320 ?eet.
AirAsia Indonesia will also
strengthen its ancillary
business, and plans to install a
new cargo reservation system.
The Indonesian travel market,
with a population density of 330
million people, is still largely
untapped. And while its priority
lies in the international sphere,
there is also vast potential for
growth in the domestic market
in the near term. These factors
together mean we are very
optimistic about what lies ahead
for AirAsia Indonesia and look
forward to serving more guests
in these exciting times.
Captain Dharmadi
Chief Executive Of?cer
AirAsia Indonesia
<
No. of Aircraft
18
<
No. of Hubs
4
(1 added in 2011)
<
No. of Passengers
3,921,039
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
93
Massive and grand in stature, the Omar Ali Saifuddin
mosque is located in the centre of Brunei’s capital, Bandar
Seri Begawan. We serve 14 weekly fights to Bandar Seri
Begawan from Kuala Lumpur, offering our guests an
opportunity to experience the richness of its economy,
culture and royal heritage.
Omar Ali Saifuddin Mosque, Brunei Darussalam
AIRASIA X >>
THE SKY’S
THE LIMIT
AIRASIA X FLEW 1.92 MILLION PASSENGERS, UP 86%.
AIRASIA X ALSO BROKE THROUGH THE 10 BILLION
REVENUE-PASSENGER-KM VOLUME GROWTH
(UP 74% FROM 2009), MAKING IT THE SECOND-LARGEST
LOW-COST CARRIER IN ASEAN IN RPK VOLUME, AFTER
AIRASIA, AND THE FASTEST GROWING AIRLINE. LOAD
FACTORS WERE KEPT CONSISTENT AT 77%.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
96
AirAsia X completed its third full
year of operations in 2010 and
broke through the RM1 billion
revenue barrier with a RM1.3
billion top-line achievement, a
77% growth from 2009.
It ?ew 1.92 million passengers,
up 86%. AirAsia X also broke
through the 10 billion revenue-
passenger-km volume growth
(up 74% from 2009), making
it the second-largest low-cost
carrier in ASEAN in RPK volume,
after AirAsia, and the fastest
growing airline. Load factors
were kept consistent at 77%.
AirAsia X also continues to
achieve record-breaking unit
operating cost levels through
its pioneering low-cost long-haul
model, with a US2.9c/available-
seat-km unit cost. Non-fuel
costs have further improved to
US1.6c/ASK. A key factor in
this feat is maximising asset
utilisation of its young Airbus
A330-300 ?eet, with AirAsia
X having continued to secure
funding to take delivery of three
new aircraft in 2010, bringing its
?eet total to 11 (nine A330-300s
and two A340-300s). It was
still able to achieve an industry-
leading technical reliability rate
of 99.51% for its A330 ?eet,
validating the quality of its
operating model.
With the new aircraft capacity,
AirAsia X expanded its route
network aggressively in
2010, adding ?ve new routes:
Mumbai, New Delhi, Tehran,
Seoul and Tokyo. And with the
recent additions of Paris and
Christchurch in early 2011,
AirAsia X now serves 15
destinations, connecting AirAsia’s
extensive ASEAN network to the
large growth markets across Asia
Paci?c and Europe. AirAsia X
intends to continue its expansion
strategy to focus on its priority
markets in Australia/New
Zealand, Korea, Japan, China
and India over the next year.
Passenger base fares achieved
were RM519, and passenger-
related ancillary income added
another RM119 per passenger,
a growth of 73% from 2009.
Cargo revenue grew by 113%
over 2009, contributing 4%
of total revenue. With 22% of
revenue coming from these
ancillary income sources, AirAsia
X continues to seek ways to
expand its ancillary income
streams, including improving
duty-free and merchandising
sales, and introducing a ?y-thru
connecting transfer service.
AirAsia X also expects to see
growth from the newly-launched
AirAsia-Expedia joint venture.
In 2010, AirAsia X achieved an
EBITDAR margin of 18% and
EBIT margin of 4%. Final net
income for 2010 was RM111
million, excluding a RM53
million deferred tax asset. This
represents a net income margin
of 9% and a return on equity of
18%. Its gearing ratio has come
down from 3.55 in 2009 to 1.44
in 2010. Operating cash ?ow
grew by 37%, increasing its cash
balance to RM356 million.
Having achieved suf?cient
economies of scale from its
operations, AirAsia X embarked
on a new organisational strategy
to position itself as a stand-
alone airline while continuing to
share the AirAsia brand.
Azran Osman-Rani
Chief Executive Of?cer
AirAsia X
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
97
From the ruins of Angkor Wat in Siem Reap to the
bustling nightlife of Phnom Penh, AirAsia provides a
great link to Cambodia for our guests. Something we
have been doing since 2005.
Angkor Wat, Cambodia
THE
SOCIAL
NETWORK
A man from Kuala Lumpur who
didn’t believe in long-distance
relationships has been dating
a woman in Singapore for three
years - because AirAsia allows
them to meet regularly. A family of
26 that hadn’t travelled together
because it was too expensive got
to enjoy some quality bonding
time away from home - thanks to
AirAsia. A couple who never had
the time nor money to romance
each other ?nally found their
wings and ?ew away for a few
days - because they can, with
AirAsia.
These are just some of the heart-
warming stories AirAsia received
when we ran our Real People, Real
Stories campaign from 23 August
- 4 October 2010, in the run-up
to celebrating our 100 millionth
guest. We had asked guests to
send in their stories, pictures or
videos via any one of the following
AirAsia social media - YouTube,
blog, Twitter or Flickr. The entries
came pouring in. A hundred of
the best were rewarded with free
tickets. AirAsia, meanwhile, was
rewarded by the stories, which
reaf?rmed our belief that we are
not just in any business; we are in
the business of changing lives.
FACTS AT A GLANCE
>
No. of Twitter Fans
>150,000
>
No. of Facebook Fans
>1.3 million
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
100
SOCIAL MEDIA HAVE BECOME AN INTEGRAL PART OF
AIRASIA’S BUSINESS MODEL, FORMING A NEW DIMENSION
OF OUR EXTENSIVE USE OF TECHNOLOGY FOR GREATER
EFFICIENCIES.
The campaign would not have
been as impactful if not for the
social media, which truly bring us
closer to our guests and fans.
Whereas at AirAsia our core
business is to connect people
in the real world, using social
media, we are able to enrich
this connection by taking it to
the virtual realm. Combining the
two, we create a holistic and very
rich relationship with our guests
in which we are able to get to
know them better - know their
life stories, their hopes, their
aspirations and, more practically,
know what they expect of us.
Social media represent effective
tools for real-time interaction
with our guests. On our part, we
are able to use social media to
make announcements, inform
guests of schedule changes, and
launch new destinations through
contests and other viral means.
We also use the media in crisis
management. For example,
in 2010, when Mt Merapi in
Yogyakarta, Indonesia, erupted,
we announced the airport closure
on the social media. When the
?oods in Alor Star, Malaysia,
caused travel delays, guests
were kept posted of updates.
The advantage of social media
over the SMS, email or phone is
that one post has the ability to
reach out to the masses, allowing
for important information to
be disseminated to a targeted
audience quickly and effciently.
Social media also represent an
incredibly powerful and cost-
effective marketing tool. We are
able to use it to advertise our
1 Million Free Seats Campaigns,
saving us millions in ad spend. In
fact, social media have become
an integral part of AirAsia’s
business model, forming a new
dimension of our extensive use of
technology for greater ef?ciencies.
They have also enabled us to
keep a pulse on what our fans
are feeling. Via social media, fans
and guests who travel with the
airline can express their views
on anything related to AirAsia
– the level of service, the food
on board, the range of in-?ight
entertainment – and be assured
that their ‘voice’ will be heard by
the relevant decision makers.
The management highly values
such feedback and takes action
wherever necessary to rectify
loopholes or to further improve
the guest experience.
Our foray into the social media
grew humbly enough, with a
corporate blog, Plane Thoughts,
in 2008. Then, we got into
Facebook. Before long, we were
hooked into the entire social
media game. We started our own
Twitter and Sina, the Chinese
version; Koolred, offering travel
and lifestyle social networking;
Flickr and Instagram, where we
post photos; and even YouTube.
When we launched AirAsia
Facebook in April 2009, the
management expected to garner
a fan base of perhaps 50,000
by year end. We achieved double
that ?gure. By April 2010,
our Facebook had acquired a
following of 250,000 fans, a
milestone which we celebrated
with an exclusive low-fare
campaign for our staunch friends.
Meanwhile, we began to localise
our network of Facebook accounts
by setting up different pages in
different countries. We now have
11 Facebook pages for different
locations. In China, where there
are restrictions on Facebook, we
use RenRen, the local equivalent.
By November 2010, the AirAsia
Group had more than 1 million
Facebook fans.
AirAsia handles all social media
efforts internally. We even built
our own infrastructure, bene?ting
from the learning experience.
Needless to say, we’ve had to
increase the human resources
required to manage our growing
social media. From just one
person in the interactive division,
we now have an entire dedicated
team of Allstar social media
buffs operating out of Malaysia,
Thailand, Indonesia, Hong Kong
and London. Most of our social
media are online 24/7, allowing
us to respond promptly to queries
sent by guests and fans.
The company’s phenomenal
success with the social media
is indicative of a youthful,
tech-savvy culture which starts
from the top. Everyone on the
management team has a blog or
tweets, including AirAsia Group
CEO Dato’ Dr Tony Fernandes
and AirAsia X CEO Azran Osman-
Rani, whose blogs are among
the most-followed of Malaysian
CEOs. AirAsia Thailand CEO
Tassapon Bijleveld and AirAsia
Indonesia CEO Captain Dharmadi,
meanwhile, are active tweeters
in their own markets, carrying
the overall global branding of
AirAsia. AirAsia ensures that every
employee is part of our social
media conversation to enable
them to act as brand evangelists
and to humanise our airline. Our
pilots especially are encouraged
to engage in social media so
that passengers can relate to
them as people rather than as
disembodied voices.
AirAsia has always been the
people’s airline. We are there to
serve the underserved, and to
cater to their particular needs.
Today, with social media, we have
found a new channel of getting
closer to our communities. We
are able to hear them and assist
them in any way possible. And
that just adds to the AirAsia
magic.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
101
A LIFESTYLE
BRAND
<
Ancillary income per guest
RM44
per pax in Malaysia
THB310
per pax in Thailand
IDR123,308
per pax in Indonesia
>
18%
of total income from
ancillary business
AirAsia today is not just an airline, but a lifestyle
brand. Via the Group, consumers from around
the world can purchase branded merchandise,
buy tickets to top concerts and international
sporting events, and plan entire holidays, from
making hotel reservations to arranging for car
rentals and booking tours.
Having built its core business of selling air
travel online, AirAsia is now capitalising on its
e-commerce expertise to expand to other lifestyle
products and services. The year 2010 saw a
number of online initiatives introduced, beginning
on 8 March with AirAsiaRedTix.com, an exciting
gateway to international sporting, music and
theatre events. AirAsia entices entertainment
seekers to this portal by collating all events and
offering attractive discounts on ticket prices plus
other exclusive bene?ts. Two months later, on 26
May, it launched AirAsiaGo.com, a revamped one-
stop online travel portal where holiday-makers
can book their ?ights and tours (if desired),
make hotel reservations, arrange for car hire and
transfers - all at one go and in one sitting. The
travel portal offers a choice of more than 70,000
hotels and over 5,000 tours and activities. We
believe AirAsiaGo has huge potential, especially
as we intend to partner Expedia Inc, the largest
online travel agency in the world. With the
synergies that can be expected, AirAsia will have
the capability to reach farther than the ASEAN
region through new distribution channels which
will be made available to global audiences.
Next, the virtual world was enriched by
AirAsiaMegastore.com, offering over 15,000
items from travel related products to books,
fashion apparel and even home décor,
and allowing a global market to shop at its
convenience. This online portal was preceded
by the opening of the ?rst AirAsia Megastore
outside of the LCC Terminal in Kuala Lumpur.
These facilities are offered under the banner of
AirAsia’s ancillary business, which represents
a signi?cant source of income to the Group,
accounting for 18% of its total revenue in 2010.
This income stream has been developed, in
typical AirAsia style, to be as cost-effective as
possible, the individual initiatives being either no-
cost or low-cost. Ancillary income not only boosts
the airline’s revenue but also provides a natural
hedge against any increase in the price of oil.
Other than the online-based lifestyle initiatives
mentioned above, AirAsia also earns
commission-based income from its co-branded
credit cards with Citibank, as well as for every
CIMB AirAsia Savers Account opened. In
addition, it derives some revenue from sales of
its e-Gift vouchers and from the activities of its
recently launched Junior Jet Club.
A major source of its ancillary income is,
however, ?ight-related. Guests themselves
contribute signi?cantly to AirAsia’s ancillary
income by taking advantage of the little extras
offered to make their travel more enjoyable and
hassle-free, such as travel insurance, choosing
their seats in advance, ordering meals on their
?ights and extra baggage.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
102
In May 2010, AirAsia introduced
a win-win Pre-booked Baggage
Supersize deal in which guests
who pre-book their baggage pay
50% less than those who pay
at the counter. Even with this
discount, in 2010, guests spent
a total of RM290 million for
baggage supersize and excess
baggage. Food and beverage
on board is another source of
healthy revenue for the airline, as
AirAsia Café has become known
for offering ‘legendary’ local fare,
such as Pak Nasser’s Nasi Lemak
and Uncle Chin’s Chicken Rice.
To keep growing this source of
income, continuous efforts are
made to maintain or even improve
on the quality of the food, and
to expand the menu. In 2010,
AirAsia introduced healthier dining
options, including vegetarian
meals. It also entered into a
partnership with Fraser & Neave
Holdings Bhd on 26 January to
sell 100PLUS and Coke on all
AirAsia ?ights departing from
Malaysia beginning 1 February.
Passenger spend on ancillary
services increased across all
AirAsia operations in 2010 - up
39% to RM44 per passenger
in Malaysia, 62% to THB310
per pax in Thailand, and 60% to
IDR123,308 per pax in Indonesia.
The average spend per passenger
was RM44.9 and is targeted to
grow to RM60 per pax in 2011.
Also growing is AirAsia’s income
from its Cargo & Courier Services.
Capitalising on the belly space
of its aircraft, an extensive
?ight network and high ?ight
frequencies, AirAsia is not only
able to carry cargo but can also
offer clients considerably lower
rates than other cargo carriers,
as well as faster delivery times.
To further strengthen its Cargo &
Courier business, it has tied up
with more cargo agents and large
export-import ?rms in the markets
that it ?ies to, while reaching
markets beyond its route network
- in South Asia, Africa, the Middle
East and Europe - through special
pro-rate agreements with other
airlines. AirAsia’s Cargo & Courier
Services not only delighted the
airline with revenue of around
RM130 million in 2010, but also
earned the airline the Air Cargo
Industry Newcomer of the Year
Award 2010 at the ACW World Air
Cargo Awards.
In addition, AirAsia earns
ancillary income from airspace
advertising, namely advertising in
its Travel3Sixty in?ight magazine,
in and on the aircraft, as well as
on its website, and from chartered
?ights. As the airline increases
the number of its ?ights, and
further expands its network,
various ancillary businesses will
be boosted, adding to AirAsia’s
revenue and net pro?t.
In 2011, we expect our ancillary
business to continue to grow,
driven by passenger growth,
which has traditionally increased
every year, as well as capacity
additions in terms of new aircraft.
Guests can also look forward to
new initiatives in 2011, including
AirAsia’s loyalty programme and
the AirAsia-Expedia JV. In addition,
we will be introducing Counter
Check-in fees which, together
with all the other initiatives, will
ensure that our ancillary offerings
contribute even more to our
overall revenue, reducing the
gap with the traditionally strong
passenger fare contribution. With
ancillary income rushing out of its
infancy, it will add to the quality
brand experience that AirAsia
religiously adheres to.
OUR ancillary SERVICES
Baggage Supersize Government and Charter ?ight services
AirAsia Cargo CIMB AirAsia Savers account
AirAsia Courier Junior Jet Club Membership
AirAsia Cafe (in-?ight F&B) Merchandise and duty free
(including AirAsiaMegastore)
AirAsia Insure (travel insurance) AirAsiaGo.com (holiday-booking portal)
Pick A Seat AirAsia Credit Card
E-Gift Voucher Airspace advertising
Charter ?ights AirAsia RedTix (ticket-booking portal for sporting events,
concerts, musicals, theatre performances and more)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
103
Love is in
the air
“ It was a memorable
moment to have our
wedding reception in
the aircraft 30,000ft
above sea level. What a
wonderful moment and
journey for us to realise
this dream. ”
Iswara (Allstar) and Thanusyia
now everyone can fy
OUR GUESTS
ARE OUR
PRIORITY
Since 1 April 2010, AirAsia
has deployed a comprehensive
Microsoft-based Customer
Relationship Management
(CRM) system which integrates
its various sales, service and
marketing initiatives onto a
single platform, allowing the
Group to interact with guests
on a more informed basis and
to tailor its services to meet
individual guest’s needs.
The main focus of AirAsia’s
CRM is to enhance the guest’s
experience by improving the
speed and ef?ciency of service
at every interface between
guests and the airline – from
reservations and check-in, to
baggage handling, boarding and
in-?ight service to the provision
of rapid and effective responses
to queries and feedback. At
the airports, AirAsia stations
supervisory staff at strategic
locations to provide on-the-spot
assistance to guests. There
are also Service Counters in
the departure halls to handle
enquiries. Meanwhile, as more
than 80% of sales are achieved
online, and guests rely heavily
on the internet to manage their
bookings, various initiatives
were implemented over the year
to enable guests to perform
more functions using the AirAsia
website so as to have the
smoothest journey possible.
Web and Self Check-In
facilities. In January, AirAsia
introduced the concept of web
and self check-in. Web check-in
allows guests to check in from
their laptop or PC days before
their departure date. Self check-
in, meanwhile, employs kiosks
at the airport terminals where
guests can quickly key in their
?ght details to obtain a boarding
pass without having to queue up
at a counter.
New Skies. This new reservation
system, installed in July, uses
next-generation IT architecture
and software so it’s more ef?cient
and reliable. It provides more
functionality, ?exibility and friendly
features that enrich the guests’
booking experience. A particularly
useful feature is the Low Fare
Finder, which helps guests
?nd the cheapest ?ight period
for a given route. In terms of
capacity, New Skies is designed
to handle up to almost one
million ?ights a day, double that
of the Open Skies system used
previously. This will be especially
useful during AirAsia’s zero-fare
campaigns.
In 2010, AirAsia also introduced
new mobile apps for smart
phones which made booking-on-
the-move more convenient.
FACTS AT A GLANCE
>
Launching soon
airasia.com/ask
>
Online sales
77%
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
106
This advertisement is issued and published by The Royal Bank of Scotland plc which is authorised and regulated by the Financial Services Authority in the United Kingdom. Registered Of?ce: 36 St Andrew Square,
Edinburgh EH2 2YB. Registered in Scotland No. 90312. Registered in Australia: ABN 30 101 464 528. This advertisement has been prepared for information only. It should not be construed as an offer to sell or the solicitation
of an offer to subscribe for a product or service. The Royal Bank of Scotland N.V. is incorporated in the Netherlands. The Royal Bank of Scotland plc and The Royal Bank of Scotland N.V. are authorised agents of each other
in certain jurisdictions. RBS Securities Inc., a registered broker-dealer and member of FINRA/SIPC, is an indirect, wholly owned subsidiary of The Royal Bank of Scotland plc.
AirAsia gains competitive
advantage with unique
FX currency solution
With our unique insight into currency and interest rate risk management,
RBS expanded and tailored our leading FXmicropay solution to ?t AirAsia’s
challenging, multiple-currency requirements.
With customer and company exposure to exchange rate uncertainty
removed, AirAsia offers customers a much enhanced electronic ticket
sales experience.
To discover more visit rbs.com/gbm
Air Asia AnnRep V3 (226x286) HR.indd 1 28/04/2011 16:05
Instant Foreign Exchange
Calculator. In May, AirAsia
introduced an automated
small-value payment tool, RBS
FXmicropay, which connects the
airline’s internet booking system
with the currency trading desk
of the Royal Bank of Scotland
(RBS). This allows guests who
make bookings online to know
their exact transaction costs in
any of the available currencies. A
particularly attractive feature for
guests is the convenience of being
charged in the same currency
in which they are billed in their
monthly credit card statements.
The service is currently available
in ?ve global currencies – Euro,
Pound Sterling, New Zealand
dollar, Singapore dollar and US
dollar. In addition, the system
saves guests from currency
conversion fees.
Fly-Thru. This service allows
guests on multiple ?ights to
perform a single check-in for
their original and connecting
?ights right through to their ?nal
airport of destination. To be
implemented in January 2011,
Fly-Thru will be available for
travel on selected short-haul
AirAsia and all long-haul AirAsia
X ?ights transiting through Kuala
Lumpur in which the original
and forward ?ights have a
connecting time of between
90 minutes and six hours.
airasia.com/ask. This
integrated service will
allow guests to obtain real-
time information and enjoy
immediate solutions on AirAsia’s
suite of services. It will be
available to anyone anywhere in
the world, serving as a platform
for guests to pose questions
and engage with AirAsia via live
chat, webmail and Twitter. As
soon as a query is received,
airasia.com/ask will provide
speci?c, tailor-?tted answers
in real time through the use of
intelligent automated response
technology.
At present, AirAsia measures
the quality of Customer Care
performance according to the
Customer Care of?cers’ timely
response to guests’ concerns.
The target is a response time of
less than three business days,
which is often met. As part of
improvements, the airline is
adding a dimension of quality
to this purely quantitative
measurement. More speci?cally,
it would like to gauge the level
of guest satisfaction with the
service provided by Customer
Care of?cers. Hence, responses
to guests will be followed by a
customer satisfaction survey
that asks questions such as:
‘Are you satis?ed with the
responses to your queries?’ and
‘Were your questions answered
adequately and professionally?’
AirAsia’s CRM initiatives have
led to several awards, most
notably being named the
World’s Best Low Cost Airline by
passengers polled by Skytrax in
2009 and 2010. These are the
results of the commitment and
passion of its more than 8,000
Allstars and the innovative
use of technology. AirAsia
recognises the contributions of
its people and technology, and
will continue to invest in both so
as to maintain its unbeatable
combination of low-cost fares
and highest quality service.
THE MAIN FOCUS OF AIRASIA’S CRM IS TO ENHANCE THE
GUEST’S EXPERIENCE BY IMPROVING THE SPEED AND
EFFICIENCY OF SERVICE AT EVERY INTERFACE BETWEEN
GUESTS AND THE AIRLINE – FROM RESERVATIONS AND
CHECK-IN, TO BAGGAGE HANDLING, BOARDING AND IN-
FLIGHT SERVICE TO THE PROVISION OF RAPID AND EFFECTIVE
RESPONSES TO QUERIES AND FEEDBACK.
PAGE >
108
AIRASIA BERHAD
ANNUAL REPORT
2010
ALLSTARS,
EVERY
SINGLE ONE
EQUALLY IMPORTANT IS THE RIGHT ATTITUDE - AN OPENNESS TO NEW
IDEAS, WILLINGNESS TO DO THINGS DIFFERENTLY AND THE ABILITY,
WHEN THINGS GET TOUGH, TO TRY AND TRY AGAIN.
Culture Department was set up in 2004 for the sole
purpose of creating the same values and vision
across the Group with an emphasis on ‘ONE People,
ONE Culture, ONE AirAsia, ONE Family’. Various
fun activities are held, sometimes even involving
Allstars’ children, to reinforce the feeling of unity and
belonging.
There is a great sense of empowerment at AirAsia,
enhanced by an open of?ce layout which encourages
easy interaction between everyone, and a ?at hierarchy
that breaks down psychological and cultural barriers.
There are no titles on name cards and everyone is on
?rst name basis. Allstars can go up to any member of
the management team to voice an opinion or share
an idea. Two-way communication is highly valued
and reinforced by informal interaction, face-to-face
meetings, group meetings and town hall sessions.
All top managers have blogs or send tweets to share
experiences. For a few days every month, the Group
CEO himself checks in guests at the counters, handles
baggage on the ramp and even works the aisles to
keep in touch with what’s happening on the ground,
and in the air.
Good ideas, proposed by anyone, can be
implemented quickly because there is little
bureaucracy. At the same time, bad ideas can be
scrapped just as fast. This informal structure means
not only that there are more than 8,000 brains (of
Allstars) contributing to the company’s performance -
as opposed to just the 20 or so at management level
- it also helps to keep costs down, an ever important
consideration at AirAsia.
Human capital development at AirAsia is about
providing opportunities to our Allstars that they would
be hard-pressed to ?nd in any other organisation. It
has meant, for example, ful?lling the dreams of cabin
crew and ground of?cers to become pilots. AirAsia
runs a cadet pilot programme, through which we
send up to 60 young recruits every year for a 15- to
18-month commercial pilot training programme at a
recognised ?ying school in Malaysia or overseas, after
which they train speci?cally to ?y Airbus aircraft at
the AirAsia Academy in Sepang. The academy, set up
in 2005, also trains engineers, cabin crew and other
operational staff. It is equipped with six simulators,
and also takes in trainees from third-party airlines.
When we say we value our staff, we’re not paying
lip service. At AirAsia we recognise that our people
have made us what we are today. They have stood
by us, through good times and bad, and with their
passion, dedication and sheer tenacity have kept
the AirAsia brand ?ying. Because of who they are,
and what AirAsia stands for, we do not refer to them
as our ‘employees’; they are our Allstars. And we
treat them as such.
Our philosophy at AirAsia is to attract the best,
train them and retain them. By the best, we do
not just mean people with the most impressive
paper qualifcations. Equally important is the right
attitude - an openness to new ideas, willingness
to do things differently and the ability, when things
get tough, to try and try again. We take pains to
recruit people who are able to ?t into our Allstar
culture, which is about safety, being innovative and
creative, working hard and having fun. A Corporate
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
109
As part of our objective to nurture our Allstars, they are encouraged to apply for any vacancy advertised
by AirAsia, either internally or externally. Wherever possible, Allstars are given preference over external
candidates. Based on their performance, Allstars are also identi?ed by their managers, or even higher level
management, for further professional development. Every year, we spend about RM15 million on training our
people. Loyalty and performance are highly valued and rewarded not only with the opportunity to fast-track
careers but also by attractive bonuses and pay increments. Goals are set for each Allstar and performance
measured against these goals at regular intervals. At year end, performance is linked to bonuses and
increments as well as promotions. Given AirAsia’s fast growth, there are endless opportunities for high-?yers
to stretch their capabilities, and take on roles of greater responsibility.
Like the founders of the airline, who had a dream and who have been able to turn this dream into reality, we
encourage our Allstars to dream the impossible. And we show them that, at AirAsia, everything is possible.
>
ALL FOR ONE
ONE FOR ALL
>
GO TEAM
GO ALLSTARS
GO AIRASIA
>
WHAT AIRASIA
CULTURE
STANDS FOR
We are many things,
but together we are one AirAsia
caring
passionate
full of integrity
fun
safety conscious
hard working
uni?ed by one dream
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
110
Congratulations to AirAsia
on your continued growth.
CAE is proud to be AirAsia’s training partner.
Future AirAsia pilots: the 1
st
graduating class
of the CAE Multi-crew Pilot License program, May 2011.
www.aviationaustralia.aero
EXCELLENCE IN
AVIATION TRAINING
Aviation Australia trains and provides
aircraft maintenance engineers and ?ight
attendants to international standards for
the global aviation industry.
Aviation Australia is proud of the
licensed maintenance engineer workforce
developed in partnership with Air Asia.
AVIATION AUSTRALIA - AIR ASIA’S AVIATION TRAINING PARTNER
CONGRATULATES AIR ASIA ON ACHIEVING 2 TREMENDOUS MILESTONES.
We put at your disposal our expertise that has become the
reference to all financial institutions willing to venture into
the world of Islamic Finance. By also introducing the pioneers
of the industry who have graduated from our school of thought
and culture, that has been rightfully given the name of “The
Harvard of Islamic Banking”, you can be certain that you’re
leaving no room for compromise when partnering with Kuwait
Finance House.
Kuwait Finance House... Security & Peace of Mind
A Symbol for Respect & Authority
www.kfh.com.my 03-2056 7777
OUR SAFETY
COMMITMENT
AirAsia has committed itself to a programme of reducing risks and
hazards normally associated with our industry through a Safety
Management System. This commitment is extended to ensure
the full integration of a safety culture, safety policy and safety
objectives in a proactive approach to aviation safety. In short, our
Safety Management System is not just an add-on but a core part of
our business process. It is the way we do business.
The critical safety functions of senior management are in the areas
of strategy and leadership. Senior management will provide a vision
for safety management and provide adequate resources to achieve
this level of safety.
A Safety Management System relies on the development of a
reporting culture by all employees. A just reporting system forms
the framework around which the Safety Management System is
built. It is a vehicle for ensuring that hazards and safety de?ciencies
are brought to the attention of those who have the authority to
make changes. I pledge that no disciplinary action will be taken
against any employee for reporting a safety hazard or concern to
this company’s management. I pledge also that no staff member will
be asked to compromise our safety standards to ‘get the job done’.
The Safety Management System approach ensures that authority
and accountability co-exist.
Training of employees to ensure they can perform their tasks in a
safe and ef?cient manner is an essential ingredient of AirAsia’s
Safety Management System. It is management’s responsibility to
make available and carry out this training, and it is the employee’s
responsibility to follow safe working practices.
The ultimate responsibility for safety in the company rests with me
as the Chief Executive Of?cer/Accountable Manager. Meanwhile,
the responsibility for making our operations safer for everyone lies
with each one of us – from heads of department and/or managers
to front-line employees. Each head of department and/or manager
is responsible for implementing the safety management system
in his or her area of responsibility, and will be held accountable to
ensure that all reasonable steps are taken to prevent incidents and
accidents. Each of us will be concerned for the safety of others in
our organisation.
Our business will be strengthened by making safety excellence an
integral part of all our aviation activities. Safety is a core value of
this company, and we believe in providing our employees and guests
with a safe environment. All employees must comply with this policy.
CORPORATE SAFETY COMMITMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
114
Safety is given top priority in all of our activities.
We are committed to developing, implementing,
maintaining and improving our safety strategy,
management systems and processes to ensure
that all our aviation activities are undertaken with
balanced resource allocation, aimed at achieving
the highest level of safety performance and
meeting the highest international safety standards.
All levels of management are accountable for the
delivery of this highest level of safety performance,
starting with the Chief Executive Of?cer.
Our commitment is to:
a) Develop and embed a safety culture in all
our aviation activities that recognises the
importance and value of effective aviation
safety management and acknowledges at all
times that safety is paramount.
b) Clearly de?ne for all staff their accountabilities
and responsibilities for the development
and delivery of aviation safety strategy and
performance.
c) Ensure that all staff are provided with
adequate and appropriate aviation safety
information and training, are competent in
safety matters and are only allocated tasks
commensurate with their skills.
d) Establish and implement a hazard
identi?cation and risk management process
to minimise the risks associated with
aircraft operations to a point that is as low
as reasonably practicable/achievable, and
conduct safety reviews to ensure that relevant
action is taken.
e) Ensure that suf?cient skilled and trained
resources are always available to implement
safety strategy, policy and processes.
f) Establish and measure our safety performance
against realistic objectives and/or targets.
g) Ensure that the externally supplied systems
and services that impact upon the safety
of our operations meet appropriate safety
standards.
h) Actively develop and improve our safety
processes to conform to world class
standards and comply with and, wherever
possible, exceed legislative and regulatory
requirements and standards.
i) Foster and encourage the maximum level of
reporting and transparency with non-punitive
safety/hazard reporting and having a just
culture in the airline.
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
SAFETY POLICY STATEMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
115
“ Since I’ve known
AirAsia three years ago,
my family’s fate is
changing. We travel
overseas by AirAsia,
twice a year or at least
once a year, thanks to
the generous never-
ending promotions and
low fares. ”
Amazing
Bargains
Nina
Singapore
now everyone can fy
AN AIRLINE WITH
A GIANT HEART
THE FREE SEATS CAMPAIGN IS BUT ONE OF THE MYRIAD WAYS IN WHICH
AIRASIA GIVES BACK TO THE COMMUNITY – ALBEIT BEING ONE OF OUR
MORE SPECTACULAR AND UNIQUE CONTRIBUTIONS TO SOCIETY.
No corporation can live apart
from the community it serves.
That fundamental belief of our
founders underpins the approach
towards corporate responsibility
throughout AirAsia. It informs
and impacts every aspect of
our business, making corporate
responsibility an inherent
characteristic of everything we do.
Which helps explain the mind-
blowing One Million Free Seats
campaign AirAsia holds every
year since 2006 (actually, we
gave away two million free seats
that year). Quick: Which other
company, be it in the ASEAN
region or the world, gives away
one million of its products for
free every year? Why do we do
it? Because we are dedicated to
serving the underserved; because
we are committed to sharing our
success with the communities
that allow us to operate in their
midst; because it underlines the
unwritten social contract neatly
encapsulated in our tagline, ’Now
Everyone Can Fly’ – and, if you’re
lucky, do so for free!
The free seats campaign is
but one of the myriad ways in
which AirAsia gives back to the
community – albeit being one of
our more spectacular and unique
contributions to society. But it
isn’t the only thing we do. In
line with our philosophy towards
corporate responsibility – which
goes beyond philanthropy in
making a positive difference in
the lives of our community –
AirAsia is often also among the
leaders in lending a helping hand
– or an aircraft or two – when the
community most needs it.
Here are a couple of examples:
AirAsia was the ?rst to offer to
evacuate Malaysian students out
of Cairo when political turmoil
struck Egypt. As acknowledged
by the Malaysian Prime Minister
himself, we swiftly took the lead
in arranging this rescue mission
that ultimately saw eight AirAsia
?ights from Cairo and Alexandria
to Jeddah and one from Jeddah
to Kuala Lumpur – plucking 2,380
Malaysians from a danger zone
and delivering them into the arms
of their loved ones in Malaysia. On
a somewhat less dramatic note,
but just as crucial an effort closer
to our home in ASEAN, AirAsia
Thailand swung into action to
airlift provisions and other relief
supplies to several areas in that
country when it was inundated by
the worst ?oods experienced in 50
years.
The Heart Of Asia
We have shown that we are an
airline with heart in other ways
too. We regularly run blood
donation campaigns – in 2010,
AirAsia Indonesia organised a
massive campaign for victims of
the tsunami in Mentawai and the
eruption of Mt Merapi, following
this with another blood donation
drive in collaboration with the
Indonesian Red Cross Society.
The airline also eased some of
the ?nancial burden of families
struggling to rebuild their lives
following the natural disasters
by donating school supplies for
their children. In Thailand, we
sponsored children to participate
in the Special Olympics in
Singapore and organised a trip to
the beach in Phuket for children
from the private charity school
Cheewit Boriboon House in the
hill district of Kallayanivatana,
Chiang Mai. The two-day trip was
an experience the children will
never forget, as they had never
before been on a plane nor seen
the ocean.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
118
Since 2008, the AirAsia group has
been running a Donate Your Loose
Change campaign to raise funds
to help needy patients from the
region to undergo treatment at
the National Heart Institute (IJN)
in Kuala Lumpur. In July 2010, the
programme bene?tted four-year-old
I Wayan Arya sila Arsadhana from
Bali, Indonesia, who was cured of
a congenital defect that reduced
the oxygen-carrying capacity of
his blood. While funds for his
treatment came from generous
guests on AirAsia ?ights, the
airline paid for the airfare of I
Wayan Arya and his parents.
We also partner the Children’s
Wish Society (CWS) to ful?l the
wishes of children with life-
threatening diseases. In 2010,
we waved our magic wand in the
direction of Miri, Sarawak, where
a 10-year-old Duchenne Muscular
Dystrophy patient, Mohammad
Nuraliff Omar, lives. Nuraliff
wished to have happy memories
with his parents and also to see
as many animals as he could.
Since there isn’t a proper zoo in
Sarawak, on 15 October 2010,
AirAsia ?ew the beaming Nuraliff
and his parents to Kuala Lumpur
where they visited Zoo Negara
and the Aquaria KLCC.
Our help is not restricted to Asia.
AirAsia joined hands with the
United Nations Children’s Fund
(UNICEF) to raise funds for victims
of the earthquake that struck
Haiti in January 2010. By quickly
establishing a link on our website
through which the public could
donate money, AirAsia helped to
channel millions to children and
their families in the country that’s
acknowledged as the poorest in the
Western hemisphere.
Our innovative approach to
corporate responsibility – whether
in the celestial sphere with our
aircraft or in the terrestrial realm
by our Allstars – is but another
link that bonds AirAsia with the
communities it serves.
Grooming Local Heroes
We don’t just stop there.
Realising that every community
and society needs heroes, we
decided that this was another
avenue through which we can
contribute. So, we’ve undertaken
a mission to discover and nurture
local heroes in ASEAN. And we
are doing it in the sports arena.
Why sports? Because it is a ?eld
where passions run high, and
one that transcends the usual
obstacles that tend to divide us
in this region we all call home.
There’s our title sponsorship of
the ASEAN Basketball League
– the region’s only professional
league in any sport. We’ve also
signed a three-year deal with the
Philippine Patriots basketball
team, the inaugural champions
of the ABL, to be their exclusive
sponsor. Our focus is on grooming
young basketball talents of
ASEAN to become world-class
– to demonstrate that there’s
nothing we cannot do as a people
if we put our minds to it.
We have also turned our focus
to motor sports, an area where
we believe Asians can compete
very effectively since what
counts is not physical size but
determination and determination.
In 2010, we worked with the
Sepang International Circuit (SIC)
to ?eld two riders, Malaysia’s own
Muhammad Zulfahmi Khairuddin
(Fahmi) and Sturla Fagerhaug
from Norway, in the 2010 MotoGP
World Championship. The 19-year-
old Fahmi is only the second
Malaysian ever to participate
in the MotoGP. In a stunning
achievement, he broke into the
top 20 in the Malaysian MotoGP
in 2009, becoming one of the ?rst
two wildcard riders to achieve the
feat that season – a spectacular
achievement given that he only
began racing professionally a year
ago. Fahmi has since completed
the ?rst season, scoring four
points, and began his second
season of the MotoGP in March
2011. His performance vindicated
our belief that Asians can
succeed on the world motor stage
if they are given the support,
encouragement and opportunity.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
119
In May 2010, AirAsia launched
the AirAsia-Team Lotus Driver
Development Program, capitalising
on our relationship with the
Formula 1 Team Lotus. Beginning
with just two young recruits from
ASEAN – Nabil Jeffri from Malaysia
and Daim Hishammudin from
Singapore - the programme has
grown to include seven talented
youngsters, four of whom are from
the region. The objective is to use
the expertise of Team Lotus to
coach and support the aspiring
drivers, and hopefully nurture them
into future world champions.
At the individual level, AirAsia has
identi?ed a number of Malaysian
sporting talents and sponsored
their continued development. The
list of our sports ambassadors
includes tennis players, athletes
and cricketers such as Arul
Suppiah, the only Malaysian to
have played ?rst class cricket
in England. Arul has played
for Somerset County – one of
England’s top teams – for the last
nine years as well as represented
England at four different age
levels. This 26-year-old Malaysian
has done the country proud by
being described as one of the
best ?elders in England.
Heroes all – making our
community proud and earning
ASEAN plaudits in a very
competitive environment.
The Best To Our Guests
Corporate responsibility
means being responsible to
all our stakeholders, and this
includes our guests. AirAsia has
consistently striven to provide
the best service at the best
prices to our valued guests
using the IT platform to increase
ef?ciencies and offer value-added
innovations. From the time we
began operations and were the
?rst in Asia to go ticketless with
online and phone bookings, we
have added an increasing suite
of technology-based offerings
that make it more convenient for
guests to book their ?ights and
manage their travel. Some of
our customer-related innovations
have even been world ?rsts.
We were the ?rst to offer SMS
bookings in 2003, followed by
a comprehensive system for
booking via the mobile and other
wireless devices in 2004.
In our constant quest to provide
the most affordable air travel
option, we achieved another
world ?rst in November 2008, by
abolishing the fuel surcharge from
all AirAsia ?ights. This was all the
more pronounced as the move
came just four months after the
global price of oil hit its historic
high of US$147.27 per barrel.
While achieving these
milestones, we have not let up
on performance and, aided by
the steady replacement of our
aircraft with the more ef?cient
Airbus A320 planes, we have
improved our on-time record. The
Group achieved an average on
time performance (OTP) for the
year 2010 of 81%, and we are
con?dent of improving this ?gure
once our Indonesian af?liate fully
converts to an all-A320 ?eet.
In 2010, its OTP lagged slightly
behind the other two airlines, both
operating all-A320 ?eets, at an
annual average of 73%.
See The World, Save The Planet
While we strive to do our best
for the people of ASEAN, we
are also keenly aware that our
responsibility extends to the
environment – especially given
the alarms generated by climate
change. Hence, our business
model is centred on the most
ef?cient use of resources, which
results in minimum waste. Our
decision to switch to the more
ef?cient Airbus A320 in phases
beginning in 2005 has resulted
in AirAsia having the youngest
aircraft ?eet in Asia. Our aircraft
not only are cheaper to maintain
-- 35% less in maintenance costs
-- but they also burn less fuel.
The A320 has a greater seat
capacity, allowing us to carry
32 more passengers per ?ight,
while achieving 15% greater fuel
ef?ciency on an available seat
kilometre (ASK) basis compared
to a typical legacy carrier.
AirAsia also manages to
reduce our carbon footprint by
maintaining point-to-point ?ights,
with no transits in between. To
keep our aircraft weight low, we
impose a tier of differential pricing
for baggage according to weight,
encouraging our guests to ?y
as light as possible. Together,
these initiatives have led to a
healthy fuel consumption of 169
barrels of fuel per million ASK in
2010. The fact that AirAsia is a
ticketless airline also contributes
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
120
to a healthier environment by
reducing unnecessary paper
usage. Our of?ces, too, are as
close to paperless as possible.
An Allstar Workplace
Of course, given our philosophy
towards corporate responsibility,
the same values that we practise
in the community are extended
to our workplace. Thus, we are
a meritocracy. Staff are hired
and promoted based on their
capabilities and competency.
Gender, creed, age, ethnicity
– none of these enter into the
calculation. We believe our
guests expect us to be thoroughly
professional in our duties –
and we strive to exceed their
expectations. We ?gure that as
long as a person is good enough
and qualifed enough, he or she is
welcome to join our Allstars team
– even if the individual comes
from outside the airline industry.
Even our Group CEO and Deputy
Group CEO are from the music
industry. We believe that passion,
determination, dedication and
a positive ‘can-do’ mindset are
more important qualities than
experience in the airline industry.
It’s an approach that has helped
AirAsia become the much-envied
industry leader that it is today
– and why we are the employer
of choice of our creative and hard-
working Allstars.
We provide career development
opportunities no other airline –
and very few other corporations
-- does. We have trained ?ight
attendants, guest services
of?cers and call centre operators
to become pilots. In 2005, we set
up our AirAsia Academy where
we train not only pilots but also
engineers, cabin crew and others.
The academy is equipped with the
most modern training equipment,
including six simulators, and
also serves as a quality training
ground for third-party airlines.
In the workplace, we have a
?at management structure and
an open of?ce layout which
contribute to greater interaction
between our Allstars and the
feeling that everybody counts.
Safety First
Top priority is given to safety at all
times. The Group provides safety
training to all staff at the AirAsia
Academy, and implements best
practices in the maintenance and
routine checks of our aircraft.
These operations are regularly
reviewed by internal and external
safety experts. The Group has
developed a quality assurance
system to monitor ground and
fight operations, and our quality
assurance team ensures that all
industry standards, especially
DCA guidelines, are strictly
adhered to. The DCA conducts
audits on the Group twice a year.
The A320 ?eet are checked
every day. In addition there are
weekly checks, 400 ?ight hour
checks, E checks and C checks,
all of which are monitored by the
Group’s engineering department,
centralised in Kuala Lumpur. The
engineering department has also
initiated several maintenance and
engineering initiatives to enhance
?ight data management, and
increased the frequency of transit
and hangar surveillance. Given
the scale of growth of the Group’s
?eet, the Group has subscribed
to an Aircraft Management
& Overhaul Maintenance
System (AMOS), which includes
information on maintenance,
repairs and operations.
To further enhance the safety of
our aircraft, AirAsia has teamed
with Rockwell Collins to equip the
A320s with a modern avionics
package which includes a multi-
scan hazard detection system
to analyse weather hazards, and
a GLU-925 multi-mode receiver,
which enhances precision landing
capabilities.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
121
The Macau route is an important gateway to China.
When our frst fight departed from Kuala Lumpur on
15 December 2004 with a full load of 148 guests, we
knew it was the beginning of an incredible journey.
Today, the AirAsia Group is the largest airline servicing
Macau from Kuala Lumpur and Bangkok
St. Francis, Macau
STATEMENT
ON CORPORATE
GOVERNANCE
THE BOARD OF DIRECTORS OF AIRASIA IS COMMITTED IN ENSURING THE HIGHEST STANDARDS OF
CORPORATE GOVERNANCE ARE APPLIED THROUGHOUT THE GROUP. THE BOARD CONSIDERS THAT IT
HAS COMPLIED THROUGHOUT THE YEAR UNDER REVIEW WITH THE PRINCIPLES AND BEST PRACTICES
AS SET OUT IN THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (“THE CODE”). THE FOLLOWING
SECTIONS EXPLAIN HOW THE COMPANY APPLIES THE PRINCIPLES AND SUPPORTING PRINCIPLES OF
THE CODE.
A. DIRECTORS
Roles and Responsibilities of the Board
The Board retains full and effective control over the affairs of the Company and the Group and has assumed the following to ensure the
effectiveness of the Board and to discharge its duties and responsibilities:-
• Reviewing and adopting a strategic plan for the Company;
• Approves the Company’s annual budget and carries out periodic review of the achievements against business targets;
• Identifying principal risks and to ensure implementation of appropriate system to manage these risks;
• Overseeing and evaluating the conduct of the Company’s business;
• Succession planning;
• Developing and implementing an investor relations program; and
• Reviewing adequacy and integrity of the Company’s internal controls.
Board Balance and Meetings
The Board of Directors consists of nine (9) Members, the details are given on pages 42 to 47. One (1) of the Board Member is the Non-
Executive Chairman, two (2) are Executive Directors and six (6) are Non-Executive Directors. Five (5) of the Non-Executive Directors ful?l
the criteria of independence as defned in the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa
Malaysia”). The high proportion of Independent Non-Executive Directors (more than one-third) provides for effective check and balance in the
functioning of the Board.
The Board is of the opinion that the appointment of Senior Independent Non-Executive Director to whom concerns may be conveyed, is not
necessary as the Chairman fully encourages Board members to actively participate in Board meetings.
The roles of Chairman and Group Chief Executive Of?cer (“Group CEO”) and the Group Deputy Chief Executive Of?cer are separate with a clear
division of responsibility between them.
The size, balance and composition of the Board supports the Board’s role, which is to determine the long term direction and strategy of the
Group, create value for shareholders, monitor the achievement of business objectives, ensure that good corporate governance is practised and
to ensure that the Group meets its other responsibilities to its shareholders, other stakeholders and guests.
The Non-Executive Directors are persons of high caliber and integrity, and they collectively possess rich experience primarily in ?nance, in
Government and private sector enterprises and bring wide and varied commercial experience to Board and Committee deliberations. The
Non-Executive Directors devote suf?cient time and attention as necessary in order to perform their duties. Other professional commitments
of the Non-Executive Directors are provided in their biographies on pages 42 to 47. The Board requires that all Non-Executive Directors are
independent in character and judgment who do not participate in the day-to-day management of the Company and do not involve themselves in
business transactions or relationships with the Group, in order not to compromise their objectivity.
Board meetings for each ?nancial year are scheduled well ahead before the end of the preceding ?nancial year so that the Directors can plan
accordingly and ?t the year’s Board meetings into their respective schedules.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
124
STATEMENT
ON CORPORATE
GOVERNANCE
During the ?nancial year ended 31 December, 2010, the Board of Directors held a total of ?ve (5) meetings and the details of Directors’
attendances are set out below:
Name: No. of Meetings Attended
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar 5
Dato’ Sri Dr. Anthony Francis Fernandes 5
Dato’ Kamarudin bin Meranun 4
Conor Mc Carthy 3
Dato’ Leong Sonny @ Leong Khee Seong 5
Dato’ Fam Lee Ee 5
Datuk Alias bin Ali 4
Dato’ Mohamed Khadar bin Merican 4
En. Mohd Omar bin Mustapha
1
N/A
Note 1
Note 1: En. Mohd Omar bin Mustapha was only appointed on 16 March 2011
Supply of Information
Five (5) days prior to the Board Meetings, all Directors will receive the agenda and a set of Board papers containing information for
deliberation at the Board Meetings. This is to accord suf?cient time for the Directors to review the Board papers and seek clari?cations that
they may require from the Management or the Company Secretary. Urgent papers may be presented and tabled at the Board meetings under
supplemental agenda. The Board meeting papers are presented in a concise and comprehensive format. Board meeting papers tabled to
Directors include progress reports on business operations by GCEO; detailed information on business propositions; quarterly and annual
?nancial statements, corporate proposals including where relevant, supporting documents such as risk evaluations and professional advice
from solicitors or advisers and report on the directors’ dealings in securities, if any. In order to maintain con?dentiality, meeting papers on
issues or corporate proposals which are deemed material and price-sensitive would be handed out to Directors at the Board meeting. The
Company Secretary ensures that all Board meetings are properly convened, and that accurate and proper records of the proceedings and
resolutions passed are recorded and maintained in the statutory register at the registered of?ce of the Company.
As a Group practice, any Director who wishes to seek independent professional advice in the furtherance of his duties may do so at the
Group’s expense. Directors have access to all information and records of the Group and also the advice and services of the Company
Secretary, who also serve in that capacity in the various Board Committees. The Company Secretary also serves notice to Directors on the
closed period for trading in AirAsia Berhad shares, in accordance with the black-out periods stated in Chapter 14 on Dealings in Securities of
the MMLR of Bursa Malaysia.
Appointments to the Board
The Group has implemented procedures for the nomination and election of Directors via the Nomination Committee. The Company Secretary
will ensure that all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligations
are met.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
125
Directors’ Training
All the Directors have attended the Mandatory Accreditation Program prescribed by Bursa Malaysia.
Directors are regularly updated on the Group’s businesses and the competitive and regulatory environment in which they operate. Directors,
especially newly appointed ones, are encouraged to visit the Company’s operating centre to have an insight on the Company’s operations
which could assist the Board to make effective decisions.
For the year under review, the Directors had continuingly kept abreast with the development in the market place with the aim of enhancing their
skills, knowledge and experience.
Among the training programmes, seminars and brie?ngs attended during the year were as follows:-
Name: Programmes
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar • IBM 2010 Global CEO Study
• Evening Talks on Corporate Governance by Bursa Malaysia
Dato’ Sri Dr. Anthony Francis Fernandes • Y1 Malaysia roundtable discussion
• Turner Asia Pacifc Leadership
• Invest Malaysia Roadshow with Bursa Malaysia
• 2010 National Tax Conference
• Asian Bloggers Social Media Conference
• Y1 Malaysia Seminar
• Pemandu CEO Forum
• 1st Annual Credit Suisse Emerging Markets Leadership Forum
• On-going private briefngs on fnancial markets by AirAsia’s key
bankers
Dato’ Kamarudin bin Meranun • On-going private briefngs on fnancial markets by AirAsia’s key
bankers
Dato’ Leong Sonny @ Leong Khee Seong • Forum on FRS 139 Financial Instruments: Recognition and
Measurement
• World Capital Markets Symposium 2010
Dato’ Fam Lee Ee • Forum of FRS 139 Financial Instruments by Bursa; and
• SC-Bursa Corporate Governance week 29/10/10
Conor Mc Carthy • Raymond James Growth Airlines Seminar
Datuk Alias bin Ali • 6th World Islamic Economic Forum
• Understanding related party and confict of interest transactions
reporting compliance and Statutory derivative action in Malaysia
Dato’ Mohamed Khadar bin Merican • Board High Performance Program – Leadership Best Practices by
Harvard Business School, United States
• Financial Institutions’ Directors’ Remuneration Programme by
Bank Negara Malaysia
• Briefng on Global Entertainment & Media Outlook 2010 by
PricewaterhouseCoopers
All Directors were also updated by the Company Secretary on changes to the relevant guidelines on the regulatory and statutory requirements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
126
Re-election of Directors
The Articles of Association of the Company provide that at least one-third of the Directors are subject to retirement by rotation at each Annual
General Meeting (“AGM”) and that all Directors shall retire once in every three years, and are eligible to offer themselves for re-election. The
Articles of Association also provide that a Director who is appointed by the Board in the course of the year shall be subject to re-election at
the next AGM to be held following his appointment. Directors over seventy years of age are required to submit themselves for re-appointment
annually in accordance with Section 129(6) of the Companies Act, 1965.
Board Committees
To assist the Board in discharging its duties, various Board Committees have been established. The functions and terms of reference are
clearly de?ned and, where applicable, comply with the recommendations of the Code.
The Audit Committee comprises four Independent Non-Executive Directors.
The Chairman of the Audit Committee would inform the Directors at Board meetings, of any salient matters raised at the Audit Committee
meetings and which require the Board’s notice or direction.
Further information on the composition, terms of reference and other information relating to the Audit Committee are set out on pages 131 to
134 of this Annual Report.
The Nomination Committee comprises three Non-Executive Directors, two of whom are independent namely:-
Chairman: Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
(Non-Executive Director)
Members: Datuk Alias bin Ali
(Independent Non-Executive Director)
Dato’ Fam Lee Ee
(Independent Non-Executive Director)
The primary responsibility of the Nomination Committee in accordance with its terms of reference is to assist the Board with the following
functions:-
• To assess and recommend new nominees for appointment to the Board and Board Committees (the ultimate decision as to whom shall
be nominated should be the responsibility of the full Board after considering the recommendations of such a Committee).
• To review the required mix skills and experience and other qualities, including core competencies which the Non-Executive Directors
should bring to the Board.
• To assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual Director.
STATEMENT
ON CORPORATE
GOVERNANCE
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
127
The Remuneration Committee comprises three Independent Non-Executive Directors namely:-
Chairman: Datuk Alias bin Ali
(Independent Non-Executive Director)
Members: Dato’ Leong Sonny @ Leong Khee Seong
(Independent Non-Executive Director)
Dato’ Fam Lee Ee
(Independent Non-Executive Director)
The primary responsibility of the Remuneration Committee in accordance with its terms of reference is to assist the Board with the following
functions:-
• To review and to consider the remuneration of Executive Directors which is in accordance with the skill, experience and expertise they
possess and make recommendation to the Board on the remuneration packages of Executive Directors.
• To provide an objective and independent assessment of the bene?ts granted to the Executive Directors.
• To conduct continued assessment of individual Executive Directors to ensure that remuneration is directly related to corporate and
individual performance.
• Annual review of the overall remuneration policy for Directors for recommendation to the Board.
The Safety Review Board was established in August 2005 with the purpose of providing Board level oversight and input to the management of
Safety within AirAsia’s operations. The Board appoints the Chairman of the Committee and a meeting is held each quarter to review progress
and trends in relation to Flight Safety & Airworthiness, Incident Reports, Investigations and recommendations and Flight Data Analysis and
Recommendations. The Committee comprises two Non-Executive Directors, namely:-
Chairman: Mr. Conor Mc Carthy
(Non-Executive Director)
Member: Dato’ Mohamed Khadar bin Merican
(Independent Non-Executive Director)
and the other members include relevant operations safety and security specialists from AirAsia and from our af?liates in Thailand and
Indonesia. A report is provided to Board each Quarter.
The Employee Share Option Scheme (“ESOS”) Committee comprises of the Group CEO, the Deputy Group Chief Executive Of?cer (“Deputy
Group CEO”), the Group Regional Head Finance and the Company’s External Legal Advisor. The ESOS Committee was established to
administer the ESOS of the Group in accordance with the objectives and regulations thereof and to determine the participation eligibility,
option offers and share allocations and to attend to such other matters as may be required.
B. DIRECTORS REMUNERATION
The remuneration package comprises the following elements:-
1. Fee
The fees payable to each of the Non-Executive Directors for their services on the Board are recommended by the Board for ?nal approval by
shareholders of the Company at the AGM.
2. Basic salary
The basic salary for each Executive Director is recommended by the Remuneration Committee and approved by the Board, taking into
account the performance of the individual, the in?ation price index and information from independent sources on the rates of salary for
similar positions in other comparable companies internationally. Salaries are reviewed annually.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
128
3. Bonus scheme
The Group operates a bonus scheme for all employees, including the Executive Directors. The criteria for the scheme are dependent on
various performance measures of the Group, together with an assessment of each individual’s performance during the period.
4. Bene?ts-in-kind
Other customary bene?ts (such as private medical care, car allowance, travel coupons, etc.) are made available as appropriate.
5. Service contract
Both the Group CEO and Deputy Group CEO, have a three-year service contract each with AirAsia.
6. Directors’ share options
There was no movement in Directors’ share options during the year ended 31 December 2010.
Details of the Directors’ remuneration are set out in Note 5 of the Audited Financial Statements on pages 173 to 174 of this Annual Report.
Whilst the Code has prescribed for individual disclosure packages, the Board is of the view that the transparency and accountability aspects of
Corporate Governance in respect of the Directors’ remuneration are appropriately and adequately addressed by the band disclosure as disclosed
in the said Note 5.
C. SHAREHOLDERS
Investor Relations
The Company is committed to maintaining good communications with shareholders and investors. Communication is facilitated by a number
of formal channels used to inform shareholders about the performance of the Group. These include the Annual Report and Accounts and
announcements made through Bursa Malaysia, as well as through the AGM.
Members of senior management are directly involved in investor relations through periodic roadshows and investor brie?ngs in the country and
abroad with ?nancial analysts, institutional shareholders and fund managers.
Reports, announcements and presentations given at appropriate intervals to representatives of the investment community are also available for
download at the Group’s website at www.airasia.com. Shareholders may obtain the Company’s announcements via the Bursa Malaysia’s website
at “http://www.bursamalaysia.com”.
Any queries or concerns regarding the Group may be directed to the Investor Relations Department at [email protected].
Annual General Meeting
Given the size and geographical diversity of our shareholder base, the AGM is another important forum for shareholder interaction. All
shareholders are noti?ed of the meeting together with a copy of the Group’s Annual Report at least 21 days before the meeting is held.
At the AGM, the Group CEO will conduct a brief presentation on the Group’s performance for the year and future prospects. The Chairman and
all Board Committee chairmen where possible will be present at the AGM to answer shareholders’ questions and hear their views during the
meeting. Shareholders are encouraged to participate in the proceedings and engage with dialogue with the Board and Senior Management.
Corporate Disclosure Policy
AirAsia Berhad observed the continuing disclosure obligation imposed upon a listed issuer by Bursa Malaysia. A Corporate Disclosure Policy
was approved by the Board, which provides accurate, balanced, clear, timely and complete disclosure of corporate information to enable
informed and orderly market decisions by investors. In this respect, the Company follows the disclosure guidelines and regulation of Bursa
Malaysia.
Material information will in all cases be disseminated via Bursa Malaysia and other means.
STATEMENT
ON CORPORATE
GOVERNANCE
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
129
D. ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board aims to ensure that the quarterly reports, annual audited fnancial statements as well as the annual review of operations in the
Annual Report re?ect full, fair and accurate recording and reporting of ?nancial and business information in accordance with the MMLR of
Bursa Malaysia.
The Directors are also required by the Companies Act, 1965 to prepare the Group’s annual audited fnancial statements with all material
disclosures such that they are complete, accurate and in conformance with applicable accounting standards and rules and regulations. The
Audit Committee assists the Board in overseeing the ?nancial reporting process.
Audit Committee and Internal Control
The Board’s governance policies include a process for the Board, through the Audit Committee to review regularly the effectiveness of the
system of internal control as required by the Code. A report on the Audit Committee and its terms of reference is presented on pages 131 to
134 of this Annual Report.
The Board has overall responsibility for the Group’s system of internal control, which comprises a process for identifying, evaluating and
managing the risks faced by the Group and for regularly reviewing its effectiveness in accordance with the Code.
The Board con?rms that this process was in place throughout the year under review and up to the date of approval of these ?nancial
statements. The primary aim is to operate a system which is appropriate to the business and which can, over time, increase shareholder
value whilst safeguarding the Group’s assets. The system is designed to manage, rather than eliminate, the risk of failure to achieve business
objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Statement of Internal Control is set out in pages 135 to 136.
Whistleblowing Program
In order to improve the overall organisational effectiveness and to uphold the integrity of the Company in the eyes of the public, the Company
has updated the whistleblowing program during the year which acts as a formal communication channel where all stakeholders can
communicate their concerns in cases where the Company’s business conduct is deemed to be contrary to the Company’s common values.
All concerns should be addressed to the Chief Audit Executive (Audit & Consulting Services) who will then assess all concerns reported and
recommend the appropriate action, and subsequently:
• Compile all reports received and submit to the Chairman of the Audit Committee; and
• Report to Management on behalf of the Audit Committee the results of the investigation for further action.
All details pertaining to the name and position of the whistleblower will be kept strictly con?dential throughout the investigation proceedings.
Relationship with the External Auditors
The Board, through the Audit Committee, has maintained appropriate, formal and transparent relationship with the external auditors. The
Audit Committee meets the external auditors without the presence of management, whenever necessary, and at least twice a year. Meetings
with the external auditors are held to further discuss the Group’s audit plans, audit ?ndings, ?nancial statements as well as to seek their
professional advice on other related matters. From time to time, the external auditors inform and update the Audit Committee on matters that
may require their attention.
This statement is made in accordance with a resolution of the Board of Directors of AirAsia dated 19 April 2011.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
130
AUDIT
COMMITTEE
REPORT
TERMS OF REFERENCE OF THE AUDIT COMMITTEE
A. COMPOSITION
The Committee shall comprise at least three non-executive directors appointed by the Board of Directors. All the members of the
Committee must be non-executive directors, with a majority of them being independent directors. All members of the Committee shall
be ?nancially literate and at least one member shall:
(i) be a member of the Malaysian Institute of Accountants; or
(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years of working experience and:-
• he must have passed the examinations specifed in Part I of the 1st Schedule of the Accountants Act 1967; or
• he must be a member of one of the associations of accountants specifed in Part II of the 1st Schedule of the Accountants
Act 1967; or
(iii) fulfls such other requirements as prescribed or approved by the Exchange.
The appointment terminates when a member ceases to be a Director. No alternate director can be appointed as a member of the
Committee.
Members of the Committee shall elect an Independent Director on the Committee as Chairman.
If a member of the Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is
reduced below three, the Board shall, within three months appoint such number of new members as may be required to make up the
minimum of three members.
The terms of of?ce and performance of the Committee and each of its members shall be reviewed by the Board at least once every
three years.
B. ROLES AND RESPONSIBILITY
The primary roles and responsibilities of the Committee with regards to the AirAsia Group’s Internal Audit function, external auditors,
?nancial reporting, related party transactions, annual reporting and investigation are as follows:
Internal Audit
• Mandate the internal audit function to report directly to the Committee;
• Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the
necessary independence and authority to carry out its work, which should be performed professionally and with impartiality and
pro?ciency;
• Review the internal audit reports and to ensure that appropriate and prompt remedial action is taken by the Management on
lapses in controls or procedures that are identi?ed by internal audit;
• Review the appraisal or assessment of the performance of members of the internal audit function;
• Approve the appointment or termination of the Regional Head - Internal Audit and senior staff members of Internal Audit;
• Take cognisance of resignations of internal audit staff and the reason for resigning.
PAGE >
131
AIRASIA BERHAD
ANNUAL REPORT
2010
External Auditor
• To consider the appointment of the external auditor, the audit fees, any questions of resignation or dismissal of the external auditor;
• To submit a copy of written representation or submission of external auditors’ resignation to the Exchange;
• Monitor the effectiveness of the external auditors’ performance and their independence and objectivity;
• To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where
more than one audit ?rm is involved;
• Review major fndings raised by the external auditors and Management’s responses, including the status of the previous audit
recommendations;
• To discuss problems and reservations arising from the interim and fnal audits, and any matter the external auditor may wish to discuss
(in the absence of management where necessary); and
• To provide a line of communication between the Board and the external auditors.
Financial Reporting
To review the quarterly and year-end fnancial statements of the Group and Company, focusing particularly on:-
• any change in accounting policies and practices;
• signifcant adjustments arising from the audit;
• litigation that could affect the results materially;
• the going concern assumption; and
• compliance with accounting standards and other legal requirements.
Related Party Transactions
To review any related party transactions and con?ict of interest situations that may arise within the Company or Group including
transactions, procedures or courses of conduct that may raise questions of Management’s integrity.
Annual Report
Report the Audit Committee’s activities for the ?nancial year.
Investigation
• To consider the major fndings of internal investigations and management’s response;
• To review the Company’s procedures for detecting fraud and whistle blowing and ensure that arrangements are in place by which staff
may, in con?dence, raise concerns about possible improprieties in matters of ?nancial reporting, ?nancial control or any other matters
(in compliance with provisions made in the Companies Act, 1965).
Other Matters
To consider any other matters as directed by the Board.
C. AUTHORITY AND POWERS OF THE AUDIT COMMITTEE
In carrying out its duties, an Audit Committee shall, at the cost of the Company:
• have authority to investigate any matter within its terms of reference;
• have full, free and unrestricted access to the Group and Company’s records, properties, personnel and other resources;
• have full and unrestricted access to any information regarding the Group and Company;
• have direct communication channels with the external auditors and person(s) carrying out the internal audit function;
• be able to obtain independent professional or other advice; and
• convene meetings with the external auditors, internal auditors or both, excluding the attendance of other directors and employees
of the Company, whenever deemed necessary.
Where the Committee is of the view that a matter reported by it to the Board of directors has not been satisfactorily resolved resulting
in a breach of the Main Market Listing Requirements of Bursa Malaysia, the Committee is authorised to promptly report such matters
to the Exchange.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
132
AUDIT
COMMITTEE
REPORT
D. MEETINGS
a) The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide.
b) The quorum for an Audit Committee Meeting shall be at least two (2) members. The majority present must be Independent
Directors.
c) The External Auditor has the right to appear and be heard at any meeting of the Committee and shall appear before the
Committee when required to do so.
d) The Group Regional Head of Finance and the Regional Head of Internal Audit of the Group and Company shall normally attend the
meetings to assist in the deliberations and resolution of matters raised. However, at least twice a year, the Committee shall meet
with the External Auditors without the presence of management.
e) The Company Secretary shall act as Secretary of the Committee and shall be responsible, with the concurrence of the Chairman,
for drawing up and circulating the agenda and the notice of meetings together with the supporting explanatory documentation to
members prior to each meeting.
f) The Secretary of the Committee shall be entrusted to record all proceedings and minutes of all meetings of the Committee.
g) In addition to the availability of detailed minutes of the Audit Committee Meetings to all Board members, the Committee at each
Board Meeting will report a summary of signi?cant matters resolutions.
The above terms of reference were revised and approved by the Board of Directors of AirAsia Berhad on 27th day of February 2008.
ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR
A summary of the activities performed by the Committee during the ?nancial year ended 31 December 2010 (“Financial Year”) is set out below.
Composition of the Audit Committee and Attendance of meetings
A total of seven (7) meetings are held for the Financial Year. The members of the Committee together with the details of their attendance at
the Committee meetings held during the year are as follows:
Name Directorship No. of Meetings attended
Datuk Leong Khee Seong (Chairman of the Committee) Independent Non-Executive Director 7
Dato’ Fam Lee Ee Independent Non-Executive Director 7
Datuk Alias bin Ali Independent Non-Executive Director 7
Dato’ Mohamed Khadar bin Merican Independent Non-Executive Director 6
The Committee meets on a scheduled basis at least once in every two months. The Group Chief Executive Of?cer (GCEO), the Regional
Head – Finance, the Group Financial Controller (GFC) and the Regional Head - Internal Audit are invited to attend the meetings. The External
Auditors are also invited to discuss their management letters, Audit Planning Memorandum and other matters deemed relevant.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
133
Internal Audit
• Approved the Group’s internal audit plan, scope and budget for the fnancial year.
• Reviewed the results of internal audit reports and monitor the implementation of management action plans in addressing and resolving
issues.
• Reviewed the adequacy and competencies of internal audit function to execute the annual audit plan.
External Audit
• The Committee reviewed PricewaterhouseCoopers (“PwC”) overall work plan and recommended to the Board their remuneration and
terms of engagement as external auditors and considered in detail the results of the audit, PwC’s performance and independence and
the effectiveness of the overall audit process. The Committee recommended PwC’s re-appointment as auditors to the Board and this
resolution will be put to shareholders at the AGM.
• Reviewed updates on the introduction of International Financial Reporting Standards and how they will impact the Company and has
monitored progress in meeting the new reporting requirements.
• The Committee was also updated by PwC on changes to the relevant guidelines on the regulatory and statutory requirements.
• Deliberated and reported the results of the annual audit to the Board of Directors.
• Met with the external auditor without the presence of management to discuss any matters that they may wish to present.
Employee Share Option Scheme
• The Committee verifed the allocation options pursuant to the criteria disclosed to the employees of the Group and established
pursuant to the Employee Share Option Scheme for the Financial Year.
Financial Reporting
• Reviewed and deliberated on the Quarterly Financial Announcements and Annual Audited Financial Statements prior to submission to
the Board of Directors for consideration and approval.
Related Party Transactions
• Reviewed the related party transactions entered into by AirAsia Berhad Group.
INTERNAL AUDIT FUNCTION
AirAsia Group has a well established in-house Internal Audit (IA) to assist the Board to oversee that Management has in place a sound risk
management, internal control and governance system. The IA maintains its impartiality, pro?ciency and due professional care by having
its plans and reports directly under the purview of the Committee. The function is also guided by its Audit Charter that provides for its
independence and re?ects the roles, responsibilities, accountability and scope of work of the department. The IA reports functionally to
Audit Committee and administratively to the GCEO.
The principal responsibility of IA is to undertake regular and systematic reviews of the systems of internal controls, so as to provide
reasonable assurance that the systems continue to operate ef?ciently and effectively. The IA implements risk based auditing in establishing
the strategic and annual audit plan, being the main factor in determining the areas or units to be audited.
The audits cover the review of the adequacy of risk management, the strength and effectiveness of the internal controls, compliance
to both internal and statutory requirement, governance and management effciency, amongst others. Areas for improvement and audit
recommendations are forwarded to the management for attention and further actions. The management is responsible to ensure that
corrective actions are implemented within the required time frame. The audit reports which provide the results of the audit conducted are
submitted to the Audit Committee for review. Key control issues and recommendations are highlighted to enable the Committee to execute
its oversight function.
The Audit Committee reviews and approves the IA’s human resource requirements to ensure that the function is adequately resourced with
competent and pro?cient internal auditors. The total operational costs of the Internal Audit department for 2010 was RM1,543,376.83.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
134
STATEMENT
ON INTERNAL
CONTROL
The Board remains committed to complying with the Malaysian Code of Corporate Governance
which “… requires listed companies to maintain a sound system of internal control to safeguard
shareholders’ investment and the Company’s assets” and Bursa Malaysia’s MMLR Paragraph 15.26 (b)
which requires the Board to make a statement about the state of internal control of the listed issuer as
a group. The Board is pleased to issue the following statement of internal control for the ?nancial year
ended 31 December 2010.
Board Accountability
The Company aims to achieve the highest standards of professional conduct and ethics, to raise the
bar on accountability and to govern itself in accordance to the relevant regulations and laws. To achieve
long term shareholder value through responsible and sustainable growth, the Company has established
and maintains an internal control environment that incorporates various control mechanisms at
different levels throughout the Company. The Board of Directors is responsible for reviewing the
effectiveness of these control mechanisms. Due to the limitations inherent in any such system, this is
designed to manage rather than eliminate risk and to provide reasonable but not absolute assurance
against material misstatement or loss.
The Group has in place an on-going process for identifying, evaluating, monitoring and managing
signi?cant risks that may materially affect the achievement of corporate objectives. This process has
been in place throughout the year and is regularly reviewed by the Board of Directors. Management is
responsible for assisting the Board implement policies and procedures on risk and control by identifying
and assessing the risks faced, and in the implementation of suitable remedial internal controls to
enhance operational controls and enhance risk management. Indeed, the ?rst level of assurance comes
from business operations which perform the day to day risk management activity. The Board is informed
of major control issues encompassing internal controls, regulatory compliance and risk taking.
The Board is of the view that the system of internal controls in place for the year under review is sound
and adequate to safeguard the shareholders’ investment, the interest of customers, regulators and
employees and the Group’s assets.
Integrating Risk Management with Internal Controls
The Board continues to rely on the enterprise-wide risk management framework to manage its risks and
to form the basis of the internal audit plan. Effective risk management is particularly challenging as
the Company operates in a rapidly changing environment. The process of risk management is ongoing
where the coverage includes the Group’s associated companies.
Risk pro?ling and assessments for all business divisions and associated companies have been
performed during the development of the annual audit plan which was presented, deliberated and
approved by the Audit Committee.
The Board relies signi?cantly on the Company’s internal auditors to carry out audits of the various
operating units based on the risk-based approved audit plan.
PAGE >
135
AIRASIA BERHAD
ANNUAL REPORT
2010
Key Internal Control Processes
The key elements of the Group’s internal control system are described below:
The Board and Operational Committees
• The Board has established an organisational structure with clearly defned lines of responsibilities, authority limits and accountability
aligned to business and operations requirements which support the maintenance of a strong control environment;
• The Board has established the Board Committees with clearly defned delegation of responsibilities within the defnition of terms of
reference and organisation structures. These committees include Remuneration Committee, Nomination Committee, Audit Committee
and Safety Review Board which have been set up to assist the Board to perform its oversight functions. The Committees have the
authority to examine all matters within their scope and report to the Board with their recommendations; and
• Operational committees have also been established with appropriate empowerment to ensure effective management and supervision
of the Group’s core business operations. These committees include the Financial Risk Committee, Quality and On-Time Performance
Committee where meetings are held frequently to address emerging issues, concerns and mitigation action plans.
Internal Audit
• The Board has extended the responsibilities of the Audit Committee to include the assessment of internal controls, through the Internal
Audit (IA) function. The Audit Committee, chaired by an independent non-executive director reviews the internal controls system and
?ndings of the internal auditors and external auditors;
• The IA is an independent function that reports directly to the Audit Committee. The IA assists the Committee and the Board by
performing regular and systematic review of the internal controls, ?nancial and accounting matters, operational policies and procedures,
and ensuring that internal controls are adequate to meet the Group’s requirements. Audits are carried out on all units and stations, the
frequency of which is determined by the level of risks assessed. The selection of auditable areas to be audited is based on risk based
audit methodology taking into consideration input of the senior management and the Board;
• Management is responsible for ensuring that corrective actions to address control weaknesses are implemented within a defned time
frame. The status of implementation is monitored through follow-up audits which are also reported to the Audit Committee;
• The conducts of internal audit work is governed by the Internal Audit Charter, which is approved by the Audit Committee. The Audit
Committee also reviews the adequacy of scope, functions, competency and resources of the internal audit functions and that it has the
necessary authority to carry out its work. The IA is also guided by the International Standards for the Professional Practice of Internal
Auditing set by the Institute of Internal Auditors; and
• The Audit Committee also reviews and considers matters relating to internal controls as highlighted by the external auditors in the
course of their statutory audit of the Company’s ?nancial statements.
Other Key Elements of Internal Control
• Policies and procedures of core business processes are documented in a series of in Standard Operating and implemented throughout
the Group. These policies and procedures are subject to regular reviews, updates and continuous improvements to re?ect the changing
risks and operational needs;
• Heads of Department present their annual budget, including fnancial and operating targets and capital expenditure plans for the
approval of the Group Chief Executive Of?cer. Group annual budget is prepared and tabled for Board approval. These budgets and
business plans are cascaded throughout the organisation to ensure effective execution and follow through. Actual performance is
compared against budget and reviewed by the Board; and
• The Company has implemented a formal performance appraisal system for all levels of employees.
The statement also caters for the state of internal controls in material joint ventures and associated companies. There was no material
loss incurred as a result of internal control weaknesses.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
136
STATEMENT
ON INTERNAL
CONTROL
ADDITIONAL
COMPLIANCE
INFORMATION
The information set out below is disclosed in
compliance with the MMLR of Bursa Malaysia:-
1. UTILISATION OF PROCEEDS FROM
CORPORATE PROPOSAL
There were no proceeds raised by the
Company from corporate proposals during the
?nancial year ended 31 December 2010.
2. SHARE BUY-BACK
The Company does not have a scheme to buy-
back its own shares.
3. OPTIONS, WARRANTS OR CONVERTIBLE
SECURITIES EXERCISED
The Company did not issue any warrants or
convertible securities during the ?nancial year
ended 31 December, 2010. The AirAsia ESOS
came into effect on 1 September 2004. The
details of the ESOS exercised are disclosed in
pages 201 to 202 of the ?nancial statements.
4. AMERICAN DEPOSITORY RECEIPT (“ADR”)
OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
PROGRAMME
The Company did not sponsor any ADR or GDR
programme during the ?nancial year ended
31 December 2010.
5. SANCTIONS AND/OR PENALTIES
There were no public sanctions and/or
penalties imposed on the Company and its
subsidiaries, Directors or Management by the
relevant regulatory bodies during the ?nancial
year ended 31 December 2010.
6. NON-AUDIT FEES
The amount of non-audit fees incurred for
services rendered to the Company by the
external auditors for the ?nancial year ended
31 December 2010 were RM1,354,000.00 for
Consultancy Services.
7. VARIATION IN RESULTS
There were no pro?t estimations, forecasts or
projections made or released by the Company
during the ?nancial year ended 31 December
2010.
8. PROFIT GUARANTEE
During the ?nancial year ended 31 December
2010, the Group and the Company did not give
any pro?t guarantee.
9. MATERIAL CONTRACTS INVOLVING
DIRECTORS’ AND MAJOR SHAREHOLDERS’
There were no material contracts entered into
by the Company and its subsidiaries involving
directors and major shareholders’ interests
still subsisting at the ?nancial year ended
31 December 2010.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
137
FINANCIAL
STATEMENTS
140 DIRECTORS’ REPORT
144 INCOME STATEMENTS
145 STATEMENTS OF COMPREHENSIVE INCOME
146 BALANCE SHEETS
148 STATEMENTS OF CHANGES IN EQUITY
150 CASH FLOW STATEMENTS
152 NOTES TO THE FINANCIAL STATEMENTS
217 STATEMENT BY DIRECTORS
217 STATUTORY DECLARATION
218 INDEPENDENT AUDITORS’ REPORT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
139
The Directors hereby submit their annual report to the members together with the audited financial statements of the Group and Company
for the financial year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are described
in Note 13 to the financial statements. There was no significant change in the nature of these activities during the financial year.
FINANCIAL RESULTS
Group Company
RM’000 RM’000
Net profit for the financial year 1,061,411 1,055,075
DIVIDENDS
No dividend has been paid by the Company since the end of the previous financial year.
The Directors now recommend the payment of a first and final dividend in respect of the financial year ended 31 December 2010 as
follows:
(i) Dividend of 0.91 sen less 25% tax per ordinary share of 10 sen each amounting to RM19,026,493;
(ii) Tax exempt dividend of 0.02 sen per ordinary share of 10 sen each amounting to RM527,627; and
(iii) Single-tiered dividend of 2.07 sen per ordinary share of 10 sen amounting to RM57,306,798.
The first and final dividend which is subject to the approval of members at the forthcoming Annual General Meeting of the Company, will be
paid to shareholders registered in the Register of Members at the close of business on 20 June 2011. Based on the issued and paid-up
capital of the Company as at the date of this report, the final dividend would amount to RM76,860,918.
RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.
ISSUANCE OF SHARES
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM275,774,458 to RM277,343,608 by
way of issuance of 15,691,500 ordinary shares of RM0.10 each pursuant to the exercise of the Company’s Employee Share Option Scheme
(“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM15,377,670, has been credited to
the Share Premium account.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.
There were no other changes in the issued and paid-up share capital of the Company during the financial year.
EMPLOYEE SHARE OPTION SCHEME (“ESOS”)
The Company implemented an ESOS on 1 September 2004. The ESOS is governed by the by-laws which were approved by the shareholders
on 7 June 2004 and was effective for a period of 5 years from the date of approval. On 28 May 2009, the Company extended the duration
of its ESOS which expired on 6 June 2009 by another 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws.
The ESOS extension was not subject to any regulatory or shareholders’ approval.
Details of the ESOS are set out in Note 31 to the financial statements.
DIRECTORS’
REPORT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
140
EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONTINUED)
The Company has been granted an exemption by the Companies Commission of Malaysia, the information of which has been separately
filed, from having to disclose the list of option holders and their holdings, except for eligible employees (inclusive of Executive Directors) with
share options allocation of 320,000 and above. The employees who have been granted options of more than 320,000 shares are Dato’
Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin bin Meranun, details of which are disclosed in the section on Directors’ Interests in
Shares below.
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Dato’ Sri Dr. Anthony Francis Fernandes
Dato’ Kamarudin bin Meranun
Conor Mc Carthy
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
Datuk Alias bin Ali
Dato’ Mohamed Khadar bin Merican
Mohd Omar bin Mustapha (Appointed on 16 March 2011)
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object
or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate, other than the Company’s ESOS (see Note 5 to the financial statements).
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’ remuneration
as disclosed in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director
or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 37 to
the financial statements.
DIRECTORS’ INTERESTS IN SHARES
According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financial year in
shares and options over shares in the Company are as follows:
Number of ordinary shares of RM0.10 each
At At
1.1.2010 Acquired Disposed 31.12.2010
The Company
Direct interests
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010 – – 2,627,010
Dato’ Kamarudin bin Meranun 1,692,900 – – 1,692,900
Conor Mc Carthy 20,882,903 – 5,530,500 15,352,403**
Dato’ Leong Sonny @ Leong Khee Seong 100,000 – – 100,000
Dato’ Fam Lee Ee 200,000 – 100,000 100,000
Indirect interests
Dato’ Sri Dr. Anthony Francis Fernandes * 729,458,382 – – 729,458,382
Dato’ Kamarudin bin Meranun * 729,458,382 – – 729,458,382
* By virtue of their interests in shares in the substantial shareholder of the Company, Tune Air Sdn. Bhd. (“TASB”), Dato’ Sri Dr. Anthony
Francis Fernandes and Dato’ Kamarudin bin Meranun are deemed to have interests in the Company to the extent of TASB’s interest
therein, in accordance with Section 6A of the Companies Act, 1965.
** 100,000 shares held in personal name and 15,252,403 shares held under HSBC Nominees (Asing) Sdn Bhd.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
141
DIRECTORS’
REPORT
DIRECTORS’ INTERESTS IN SHARES (CONTINUED)
Number of options over ordinary shares of RM0.10 each
At At
1.1.2010 Granted Exercised 31.12.2010
The Company
Dato’ Sri Dr. Anthony Francis Fernandes 600,000 – – 600,000
Dato’ Kamarudin bin Meranun 600,000 – – 600,000
Other than as disclosed above, according to the register of Directors’ shareholdings, none of the other Directors in office at the end of the
financial year held any interest in shares, options over shares and debentures of the Company and its related corporations during the financial
year.
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts
and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts;
and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as
shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to
realise.
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements
of the Group and Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company
misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end
of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet their obligations as
and when they fall due.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
142
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and Company which has arisen since the end of the financial year which secures the liability of
any other person; or
(b) any contingent liability of the Group and Company which has arisen since the end of the financial year.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements
which would render any amount stated in the financial statements misleading.
In the opinion of the Directors:
(a) the results of the Group’s and Company’s operations during the financial year were not substantially affected by any item, transaction
or event of a material and unusual nature, other than those arising from the changes in accounting policy disclosed in Note 2 to the
financial statements; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a
material and unusual nature likely to affect substantially the results of the operations of the Group and Company for the financial year
in which this report is made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 28 April 2011.
DATO’ SRI DR. ANTHONY FRANCIS FERNANDES DATO’ KAMARUDIN BIN MERANUN
DIRECTOR DIRECTOR
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
143
INCOME
STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Revenue 4 3,948,095 3,132,901 3,864,459 3,072,049
Operating expenses
– Staff costs 5 (360,785) (306,002) (358,941) (304,551)
– Depreciation of property, plant and equipment 12 (519,984) (447,644) (519,958) (447,637)
– Aircraft fuel expenses (1,210,108) (927,795) (1,210,108) (927,795)
– Maintenance, overhaul, user charges and other
related expenses (476,077) (410,583) (476,077) (410,583)
– Aircraft operating lease expenses (65,692) (107,251) (65,692) (107,251)
– Travel and tour operating expenses (69,634) (53,524) – –
– Gain on unwinding of derivatives – 22,457 – 22,457
– Other operating expenses 6 (192,381) (92,188) (186,017) (90,543)
Other losses – net 7 (22,416) – (22,416) –
Other income 8 35,943 102,383 35,367 102,383
Operating profit 1,066,961 912,754 1,060,617 908,529
Finance income 9 808,033 84,505 808,023 84,462
Finance costs 9 (776,138) (374,971) (776,134) (374,971)
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Taxation
– Current taxation 10 (5,431) (11,186) (5,417) (11,186)
– Deferred taxation 10 (32,014) (104,835) (32,014) (104,835)
(37,445) (116,021) (37,431) (116,021)
Net profit for the financial year 1,061,411 506,267 1,055,075 501,999
Earnings per share (sen)
– Basic 11 38.4 20.6
– Diluted 11 38.3 20.6
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
144
STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Profit for the financial year 1,061,411 506,267 1,055,075 501,999
Other comprehensive (loss)/income
– Available-for-sale financial assets 16 4,279 – 4,279 –
– Cash flow hedges (5,639) – (5,639) –
– Foreign currency translation differences (107) – – –
Other comprehensive loss for the financial year, net of tax (1,467) – (1,360) –
Total comprehensive income for the financial year 1,059,944 506,267 1,053,715 501,999
Total comprehensive income attributable to:
– Equity holders of the company 1,059,944 506,267
– Minority interests – –
1,059,944 506,267
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
145
BALANCE
SHEETS
AS AT 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
NON-CURRENT ASSETS
Property, plant and equipment 12 9,318,041 7,942,188 9,316,592 7,941,293
Investment in subsidiaries 13 – – 25,384 22,194
Investment in associates 15 29 29 29 29
Available-for-sale financial assets 16 152,942 – 152,942 –
Other investments 17 25 26,704 25 26,704
Goodwill 18 8,738 8,738 – –
Deferred tax assets 19 719,260 751,274 719,260 751,274
Receivables and prepayments 20 23,593 23,593 23,593 23,593
Amount due from a jointly controlled entity 21 – 171,885 – 171,885
Amount due from an associate 22 117,964 253,037 117,964 253,037
Derivative financial instruments 30 25,544 – 25,544 –
10,366,136 9,177,448 10,381,333 9,190,009
CURRENT ASSETS
Inventories 23 17,553 20,864 17,005 20,316
Receivables and prepayments 20 841,122 721,082 815,921 719,608
Deposits on aircraft purchase 248,684 330,978 248,684 330,978
Amounts due from subsidiaries 24 – – 432,382 197,626
Amount due from a jointly controlled entity 21 99,802 194,503 – –
Amounts due from associates 22 162,386 203,930 162,386 203,930
Amount due from a related party 24 – 3,303 – 3,303
Deposits, cash and bank balances 25 1,504,617 746,312 1,499,061 745,345
2,874,164 2,220,972 3,175,439 2,221,106
LESS: CURRENT LIABILITIES
Trade and other payables 26 912,943 872,990 884,344 861,847
Sales in advance 328,549 283,224 307,987 272,333
Amounts due to subsidiaries 27 – – 44,251 29,055
Amount due to a jointly controlled entity 21 – – 322,614 –
Amount due to an associate 22 5,223 3,382 5,223 3,382
Amount due to a related party 27 41,262 – 41,262 –
Hire-purchase payables 28 15 56 15 56
Borrowings 29 553,967 540,212 553,967 540,212
Current tax liabilities 1,632 9,824 955 9,824
1,843,591 1,709,688 2,160,618 1,716,709
NET CURRENT ASSETS 1,030,573 511,284 1,014,821 504,397
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
146
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
NON-CURRENT LIABILITIES
Hire-purchase payables 28 – 16 – 16
Borrowings 29 7,302,884 7,067,696 7,302,884 7,067,696
Derivative financial instruments 30 452,865 – 452,865 –
7,755,749 7,067,712 7,755,749 7,067,712
3,640,960 2,621,020 3,640,405 2,626,694
CAPITAL AND RESERVES
Share capital 31 277,344 275,774 277,344 275,774
Share premium 1,221,594 1,206,216 1,221,594 1,206,216
Foreign exchange reserve 485 592 – –
Retained earnings 32 2,102,571 1,138,438 2,102,501 1,144,704
Other reserves 38,966 – 38,966 –
Shareholders’ equity 3,640,960 2,621,020 3,640,405 2,626,694
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
147
STATEMENTS OF
CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Attributable to equity holders of the Company
Issued and fully paid
ordinary shares
of RM0.10 each
Foreign Cash flow
Number Nominal Share exchange hedge AFS Retained Minority Total
Note of shares value premium reserve reserve reserve earnings Total interests equity
‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
At 1 January 2009 2,374,210 237,421 735,352 592 – – 632,171 1,605,536 – 1,605,536
Net profit for the financial year – – – – – – 506,267 506,267 – 506,267
Issuance of ordinary shares
– issue of shares 31 380,000 38,000 467,400 – – – – 505,400 – 505,400
– pursuant to the
Employee Share
Option Scheme (‘ESOS’) 31 3,535 353 3,464 – – – – 3,817 – 3,817
At 31 December 2009 2,757,745 275,774 1,206,216 592 – – 1,138,438 2,621,020 – 2,621,020
At 1 January 2010 2,757,745 275,774 1,206,216 592 – – 1,138,438 2,621,020 – 2,621,020
Effects of adoption
of FRS 139 40 – – – – (65,670) 105,996 (97,278) (56,952) – (56,952)
At 1 January 2010 (restated) 2,757,745 275,774 1,206,216 592 (66,670) 105,996 1,041,160 2,564,068 – 2,564,068
Net profit for the financial year – – – – – – 1,061,411 1,061,411 – 1,061,411
Other comprehensive income – – – (107) (5,639) 4,279 – (1,467) – (1,467)
Total comprehensive income – – – (107) (5,639) 4,279 1,061,411 1,059,944 – 1,059,944
Issuance of ordinary shares
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 15,692 1,570 15,378 – – – – 16,948 – 16,948
At 31 December 2010 2,773,437 277,344 1,221,594 485 (71,309) 110,275 2,102,571 3,640,960 – 3,640,960
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
148
Issued and fully paid
ordinary shares
of RM0.10 each Non-distributable Distributable
Cash flow
Number Nominal hedge AFS Share Retained
Note of shares value reserve reserve premium earnings Total
‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
At 1 January 2009 2,374,210 237,421 – – 735,352 642,705 1,615,478
Net loss for the financial year – – – – – 501,999 501,999
Issuance of shares
– issue of shares 31 380,000 38,000 – – 467,400 – 505,400
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 3,535 353 – – 3,464 – 3,817
At 31 December 2009 2,757,745 275,774 – – 1,206,216 1,144,704 2,626,694
At 1 January 2010 2,757,745 275,774 – – 1,206,216 1,144,704 2,626,694
Effects of adoption of FRS 139 40 – – (65,670) 105,996 – (97,278) (56,952)
At 1 January 2010 (restated) 2,757,745 275,774 (65,670) 105,996 1,206,216 1,047,426 2,569,742
Net profit for the financial year – – – – – 1,055,075 1,055,075
Other comprehensive income – – (5,639) 4,279 – – (1,360)
Total comprehensive income – – (5,639) 4,279 – 1,055,075 1,053,715
Issuance of shares
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 15,692 1,570 – – 15,378 – 16,948
At 31 December 2010 2,773,437 277,344 (71,309) 110,275 1,221,594 2,102,501 3,640,405
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
149
CASH FLOW
STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Adjustments:
Property, plant and equipment
– Depreciation 519,984 447,644 519,958 447,637
– Impairment 6,996 – 6,996 –
– Write off – 388 – 388
– Gain on disposals (1,311) (30,696) (1,311) (30,696)
Amortisation of long term prepayments 24,741 9,645 24,741 9,645
Amortisation of other investments 12 11 12 11
Unwinding of discount on intercompany receivables (9,647) – (9,647) –
Fair value losses on derivative financial instruments 295,028 – 295,028 –
Net unrealised foreign exchange gain (586,755) (39,742) (586,760) (39,742)
Interest expense 374,364 371,153 374,364 371,153
Interest income (66,699) (6,300) (66,689) (6,257)
1,655,569 1,374,391 1,649,198 1,370,159
Changes in working capital:
Inventories 3,311 (180) 3,311 (179)
Receivables and prepayments (162,883) (28,438) (139,046) (28,869)
Trade and other payables 63,453 77,701 35,177 69,716
Intercompany balances 393,568 (166,457) 401,920 (155,435)
Cash generated from operations 1,953,018 1,257,017 1,950,560 1,255,392
Interest paid (379,099) (322,407) (379,099) (322,407)
Utilisation of provision for loss on unwinding of derivatives – (151,713) – (151,713)
Interest received 57,052 6,300 57,042 6,257
Tax paid (11,808) (5,578) (11,319) (5,578)
Net cash from operating activities 1,619,163 783,619 1,617,184 781,951
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
150
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment
– Additions (1,902,833) (1,947,763) (1,902,253) (1,947,746)
– Proceeds from disposals – 182,538 – 182,538
Investment in a subsidiary company – – (3,190) –
Deposits on lease of aircraft 50,808 (12,243) 50,808 (12,243)
Purchases of available-for-sale financial assets (16,000) – (16,000) –
Net cash used in investing activities (1,868,025) (1,777,468) (1,870,635) (1,777,451)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from allotment of shares 16,948 509,217 16,948 509,217
Hire-purchase instalments paid (57) (77) (57) (77)
Proceeds from borrowings 1,562,856 1,670,390 1,562,856 1,670,390
Repayment of borrowings (572,580) (593,131) (572,580) (593,131)
Deposits (pledged)/released as securities (942) 5,112 (942) 5,112
Net cash from financing activities 1,006,225 1,591,511 1,006,225 1,591,511
NET INCREASE FOR THE FINANCIAL YEAR 757,363 597,662 752,774 596,011
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE FINANCIAL YEAR 718,465 120,803 717,498 121,487
CASH AND CASH EQUIVALENTS
AT END OF THE FINANCIAL YEAR 25 1,475,828 718,465 1,470,272 717,498
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
151
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
1 GENERAL INFORMATION
The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are
described in Note 13 to the financial statements. There was no significant change in the nature of these activities during the financial
year.
The address of the registered office of the Company is as follows:
25-5, Block H
Jalan PJU1/37, Dataran Prima
47301 Petaling Jaya
Selangor Darul Ehsan
The address of the principal place of business of the Company is as follows:
LCC Terminal
Jalan KLIA S3
Southern Support Zone
KL International Airport
64000 Sepang
Selangor Darul Ehsan
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 28 April 2011.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered
material in relation to the financial statements:
(a) Basis of preparation of the financial statements
The financial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards
(‘FRSs’), the Malaysian Accounting Standards Board (‘MASB’) approved accounting standards in Malaysia for Entities Other than
Private Entities, and comply with the provisions of the Companies Act, 1965.
The financial statements of the Group and Company have been prepared under the historical cost convention except as disclosed
in the accounting policies below.
The preparation of financial statements in conformity with FRSs and the provisions of the Companies Act, 1965 requires the use of
certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses
during the reported financial year. It also requires Directors to exercise their judgment in the process of applying the Group’s
accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of current events and
actions, actual results may differ.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the
Group’s and the Company’s financial statements are disclosed in Note 3 to the financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
152
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
Standards, amendments to published standards and interpretations that are effective
The new accounting standards, amendments and improvements to published standards and interpretations that are effective for
the Group and Company’s financial year beginning on or after 1 January 2010 are as follows:
• FRS 4 “Insurance Contract”
• FRS 7 “Financial Instruments: Disclosures” and the related Amendments
• FRS 8 “Operating Segments”
• FRS 101 (revised) “Presentation of Financial Statements”
• FRS 123 “Borrowing Costs”
• FRS 139 “Financial Instruments: Recognition and Measurement” and the related Amendments
• Amendment to FRS 1 “First-time Adoption of Financial Reporting Standards” and FRS 127 “Consolidated and Separate
Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate”
• Amendment to FRS 2 “Share-based Payment: Vesting Conditions and Cancellations”
• Amendments to FRS 132 “Financial Instruments: Presentation” and FRS 101 (revised) “Presentation of Financial Statements”
- Puttable financial instruments and obligations arising on liquidation
• IC Interpretation 9 “Reassessment of Embedded Derivatives” and the related Amendments
• IC Interpretation 10 “Interim Financial Reporting and Impairment”
• IC Interpretation 11 “FRS 2 Group and Treasury Share Transactions”
• IC Interpretation 13 “Customer Loyalty Programmes”
• IC Interpretation 14 “FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction”
• Improvements to FRSs (2009)
The adoption of these new FRSs, amendments and interpretations do not have any effect on the financial performance or financial
position of the Group and Company except for those discussed below.
(i) Revised FRS 101 “Presentation of Financial Statements”
The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in
the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in
equity in a statement of comprehensive income which can be presented as a single statement or two statements (comprising
the income statement and statement of comprehensive income). The Group has elected to present the statement of
comprehensive income in two statements. As a result, the Group has presented all owner changes in equity in the consolidated
statement of changes in equity whilst all non-owner changes in equity have been presented in the consolidated statement
of comprehensive income. There is no impact on the earnings per share since these changes affect only the presentation of
items of income and expenses.
(ii) FRS 7 “Financial Instruments : Disclosures”
Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS
132 “Financial Instruments : Disclosure and Presentation”. FRS 7 introduces new disclosures to improve the information
about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks
arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk,
including sensitivity analysis to market risk.
The Group and the Company have applied FRS 7 prospectively in accordance with the transition provisions. Hence, the new
disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the
Company’s financial statements for the financial year ended 31 December 2010. As the adoption of this new accounting
standard only results in additional disclosures, there is no impact on earnings per share.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
153
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iii) FRS 8 “Operating Segments”
FRS 8 requires segment information to be presented on a similar basis to that used for internal reporting purposes. As a
result, the Group’s segmental reporting had been presented based on the internal reporting to the chief operating decision
maker who makes decisions on the allocation of resources and assesses the performance of the reportable segments. This
standard does not have any impact on the financial position and results of the Group. The required disclosures are shown in
Note 36 to the financial statements.
(iv) FRS 139 “Financial Instruments: Recognition and Measurement”
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to
buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in
accordance with the transitional provisions.
The adoption of FRS 139 has resulted in several changes to accounting policies relating to recognition and measurement
of financial instruments. Comparatives for financial instruments have not been adjusted and therefore the corresponding
balances are not comparable. Significant changes in accounting policies are as follows:
(i) Investments
Non-current investments, previously measured at cost and subject to impairment, are now classified as available-for-sale
financial assets. These are initially measured (a) at fair value plus transaction costs and subsequently at fair value or
(b) unless fair value cannot be reliably measured due to the variability in the range of reasonable fair value estimates
is significant for that investment or the probabilities of the various estimates within the range cannot be reasonably
assessed and used in estimating fair value; in such case, they are measured at cost less impairment losses. They
are included in non-current assets unless management intends to dispose of the investment within 12 months of the
reporting date.
Changes in fair values of available-for-sale equity securities are recognised in other comprehensive income, together with
the related currency translation differences. A significant or prolonged decline in the fair value of the security below its
cost is considered as an indicator that the asset is impaired. If any such evidence exists, the cumulative loss, measured
as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised
in the income statement, is removed from equity and recognised in the income statement. Impairment losses recognised
in the income statement on equity instruments classified as available-for-sale are reversed through other comprehensive
income and not through the income statement.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other
comprehensive income are included in the income statement. Refer to Note 40 for the impact of this change in accounting
policy.
(ii) Derivatives
Prior to 1 January 2011, derivative financial instruments were not recognised in the financial statements on inception.
With the adoption of FRS 139, derivative financial instruments are initially recognised at fair value at the date the
derivative contract is entered into and are subsequently remeasured at their fair values.
The Group has applied the new policy according to the transitional provisions by recognising and measuring derivatives,
as appropriate, and recording any adjustments to the previous carrying amounts to the opening retained earnings or, if
appropriate, another category of equity, of the current financial year. The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a hedging instrument (see accounting policy Note 2(l)). Refer to Note
40 for the impact of this change in accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
154
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iv) FRS 139 “Financial Instruments: Recognition and Measurement” (continued)
(iii) Intercompany loans
During the current and prior years, the Company granted interest-free loans and advances to its subsidiaries. Prior to
1 January 2010, these loans and advances were recorded at cost in the Company’s financial statements. Upon the
adoption of FRS 139, the interest-free loans or advances are recorded initially at a fair value that is lower than cost. The
difference between the fair value and cost of the loan or advance is recognised as adjustments to the opening balance
of retained earnings. Subsequent to initial recognition, the loans and advances are measured at amortised cost. Refer
to Note 40 for the impact of this change in accounting policy.
(iv) Loans and receivables
Non-current receivables, previously measured at invoiced amount and subject to impairment, are now classified as loans
and receivables and measured at fair value plus transaction costs initially and subsequently, at amortised cost using the
effective interest method.
When loans and receivables are impaired, the carrying amount of the asset is reduced and the amount of the loss
is recognised in the income statement. Impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the asset’s original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the
reversal of the previously recognised impairment loss is recognised in the income statement.
Prior to 1 January 2010, the Group also stated its other non-current financial liabilities at undiscounted amount payable.
With the adoption of FRS 139, these financial liabilities are initially measured at fair value and subsequently at amortised
cost using the effective interest rate method.
In accordance with the transitional provisions for the first time adoption of FRS 139, the above changes in accounting
policy have been accounted for prospectively and the comparatives as at 31 December 2009 are not restated. Refer to
Note 40 for the impact of this change in accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
155
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iv) FRS 139 “Financial Instruments: Recognition and Measurement” (continued)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group
and Company but not yet effective and have not been early adopted
The following new and revised standards, interpretations and amendments to standards have been published and are
mandatory for the Group’s accounting periods beginning on or after 1 January 2011 or later periods, but the Group has not
early adopted them:
– The revised FRS 3 “Business combinations” (effective prospectively for accounting period beginning 1 July 2010)
continues to apply the acquisition method to business combinations, with some significant changes. For example, all
payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments
classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-
acquisition basis to measure the minority interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply
FRS 3 (revised) prospectively to all business combinations from 1 January 2011.
– The revised FRS 124 “Related party disclosures” (effective from 1 January 2012) removes the exemption to disclose
transactions between government-related entities and the government, and all other government-related entities. The
following new disclosures are now required for government related entities:
– The name of the government and the nature of their relationship;
– The nature and amount of each individually significant transactions; and
– The extent of any collectively significant transactions, qualitatively or quantitatively.
This standard is not expected to have a material impact on the earnings per share since these changes only result in
additional disclosures.
– The revised FRS 127 “Consolidated and separate financial statements” (applies prospectively to transactions with non-
controlling interests from 1 July 2010) requires the effects of all transactions with non-controlling interests to be recorded in
equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. When this
standard is effective, all earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest,
even if the attribution of losses to the non-controlling interest results in a debit balance in the shareholders’ equity. Profit
or loss attribution to non-controlling interests for prior years is not restated. The standard also specifies the accounting
when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in
the income statement. The Group will apply FRS 127 (revised) prospectively to transactions with minority interests from 1
January 2011. This standard is not expected to have a material impact on the Group’s financial statements.
– Amendments to FRS 7 “Financial instruments : Improving Disclosures” and FRS 1 “First-time adoption of financial reporting
standards” (effective from 1 January 2011) requires enhanced disclosures about fair value measurements and liquidity
risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement
hierarchy. The Group and Company will apply Amendments to FRS 7 from 1 January 2011. This standard is not expected
to have a material impact on earnings per share since these changes only result in additional disclosures.
– Amendments to FRS 132 “Financial instruments : Presentation” on classification of rights issue (effective from 1 March
2010) addresses accounting for rights issues that are denominated in currency other than the functional currency of the
issuer. Provided certain conditions are met, such rights issues are now classified as equity instruments instead of as
derivative liabilities, regardless of the currency in which the exercise price is denominated. The Group and Company will
apply Amendments to FRS 132 “Classification of Rights Issues” prospectively from 1 January 2011. This standard is not
expected to have a material impact on the Group’s and Company’s financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
156
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
Company but not yet effective and have not been early adopted (continued)
– IC Interpretation 15 “Agreements for construction of real estates” (effective from 1 January 2012) supersedes FRS 201 “Property
development activities” and clarifies that property development activities are sale of goods, instead of construction contracts.
IC Interpretation 15 will result in a change in accounting policy for revenue recognition for property development activities of the
Group from percentage of completion method to completion method where revenue can only be recognised when the Group has
transferred control and the significant risks and rewards of ownership of the completed properties to the buyer.
– IC Interpretation 16 “Hedges of a net investment in a foreign operation” (effective from 1 July 2010) clarifies the accounting
treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences
in functional currency, not presentation currency, and hedging instruments may be held by any entity in the Group. The
requirements of FRS 121 “The effects of changes in foreign exchange rates” do apply to the hedged item. This IC is not
expected to have a material impact on the Group’s and Company’s financial statements.
– IC Interpretation 17 “Distribution of non-cash assets to owners” (effective from 1 July 2010) provides guidance on accounting
for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as
dividends. FRS 5 has also been amended to require that assets are classified as held for distribution only when they are
available for distribution in their present condition and the distribution is highly probable. This IC is not expected to have a
material impact on the Group’s or Company’s financial statements.
– IC Interpretation 18 “Transfers of assets from customers” (effective prospectively for assets received on or after 1 January
2011) provides guidance where an entity receives from a customer an item of property, plant and equipment (or cash to
acquire such an asset) that the entity must then use to connect the customer to a network or to provide the customer with
services. Where the transferred item meets the definition of an asset, the asset is recognised as an item of property, plant
and equipment at its fair value. Revenue is recognised for each separate service performed in accordance with the recognition
criteria of FRS 118 “Revenue”. The Group and Company will apply this IC Interpretation prospectively from 1 January 2011.
This IC is not expected to have a material impact on the Group’s or Company’s financial statements.
– IC Interpretation 19 “Extinguishing financial liabilities with equity instruments” (effective from 1 July 2011) provides clarification
when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s
shares or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between
the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in the
income statement. Entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity
with no gain or loss recognised in the income statement. This IC is not expected to have a material impact on the Group’s or
Company’s financial statements.
– Amendments to IC Interpretation 14 “FRS 119 - The limit on a defined benefit assets, minimum funding requirements and their
interaction” (effective from 1 July 2011) permits an entity to recognise the prepayments of contributions as an asset, rather
than an expense in circumstances when the entity is subject to a minimum funding requirement and makes an early payment
of contributions to meet those requirements. This IC is not expected to have a material impact on Group’s or Company’s
financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
157
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
The following amendments are part of the MASB’s improvements project that are relevant and effective for annual periods beginning
on or after 1 July 2010
Improvements to FRSs:
– FRS 2 (effective from 1 July 2010) clarifies that contributions of a business on formation of a joint venture and common control
transactions are outside the scope of FRS 2.
– FRS 3 (effective from 1 January 2011)
– Clarifies that the choice of measuring non-controlling interests at fair value or at the proportionate share of the
acquiree’s net assets applies only to instruments that represent present ownership interests and entitle their holders to
a proportionate share of the net assets in the event of liquidation. All other components of non-controlling interest are
measured at fair value unless another measurement basis is required by FRS.
– Clarifies that the amendments to FRS 7, FRS 132 and FRS 139 that eliminate the exemption for contingent consideration,
do not apply to contingent consideration that arose from business combinations whose acquisition dates precede the
application of FRS 3 (2010). Those contingent consideration arrangements are to be accounted for in accordance with
the guidance in FRS 3 (2005).
– FRS 5 “Non-current asset held for sale and discontinued operations” (effective from 1 July 2010) clarifies that all of a
subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control.
Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met.
– FRS 101 “Presentation of financial statements” (effective from 1 January 2011) clarifies that an entity shall present an
analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the
notes to the financial statements.
– FRS 138 “Intangible Assets” (effective from 1 July 2010) clarifies that a group of complementary intangible assets acquired
in a business combination may be recognised as a single asset if each asset has similar useful lives.
– IC Interpretation 9 (effective from 1 July 2010) clarifies that this interpretation does not apply to embedded derivatives in
contracts acquired in a business combination, businesses under common control or the formation of a joint venture.
The above mentioned Improvement to FRSs are not expected to have any material impact on the Group’s and Company’s
financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
158
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Group accounting
(i) Subsidiaries
Subsidiaries are those corporations or other entities (including special purpose entities) in which the Group has power to
exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying
a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries
are fully consolidated from the date on which control is transferred to the Group and are excluded from consolidation from
the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is recorded as
goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the
difference is recognised directly in the consolidated income statement (see Note 2(c) on goodwill).
Minority interests represent that portion of the profit or loss and net assets of subsidiaries attributable to equity interest that
are not owned, directly or indirectly through the subsidiaries, by the parent. It is measured at the minorities’ share of the fair
values of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in
subsidiaries’ equity since that date. Separate disclosure is made of minority interests.
Intragroup transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the accounting policies
adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group’s share of the
subsidiary’s net assets as of the date of disposal, including the cumulative amount of any exchange differences that relate to
that subsidiary which were previously recognised in equity, and is recognised in the consolidated income statement.
(ii) Jointly controlled entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing
of control by the Group with one or more parties where the strategic financial and operation decisions relating to the entity
requires unanimous consent of the parties sharing control.
The Group’s interest in jointly controlled entities is accounted for in the consolidated financial statements using the equity
method of accounting as described in Note 2(b)(iii).
The Group’s share of its jointly controlled entities’ post-acquisition profits or losses is recognised in the consolidated income
statement, and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investments. When the Group’s share of losses in
jointly controlled entities equals or exceeds its interest in the jointly controlled entities, including any other long-term interests
that, in substance, form part of the Group’s net investment in those entities, the Group discontinues recognising its share of
further losses.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
159
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Group accounting (continued)
(ii) Jointly controlled entities (continued)
After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entities. If
the jointly controlled entities subsequently report profits, the Group resumes recognising its share of those profits only after
its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the
Group’s interest in the jointly controlled entities; unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Where necessary, in applying the equity method, appropriate adjustments
are made to the financial statements of the jointly controlled entities to ensure consistency of accounting policies with those
of the Group.
(iii) Associates
Associates are corporations, partnerships or other entities in which the Group exercises significant influence but which it does
not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the
power to participate in the financial and operating policy decisions of the associates but not control over those policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.
Equity accounting is discontinued when the Group ceases to have significant influence over the associates. The Group’s
investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss (see Note 2(c)).
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated income statement,
and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investments. When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including any other long-term interests that, in substance, form part of the
Group’s net investment in the associate, the Group discontinues recognising its share of further losses.
After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate
subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals
the share of losses not recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Where necessary, in applying the equity method, appropriate adjustments are made to the financial statements
of the associates to ensure consistency of accounting policies with those of the Group.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
160
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries over the Group’s share of the fair value of the identifiable
net assets including contingent liabilities of subsidiaries at the date of acquisition.
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment at least annually, or when events
or circumstances occur indicating that an impairment may exist. Impairment of goodwill is charged to the consolidated income
statement as and when it arises. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity disposed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each cash-generating unit or a group of cash-
generating units represents the lowest level within the Group at which goodwill is monitored for internal management purposes and
which are expected to benefit from the synergies of the combination.
Goodwill on acquisition of jointly controlled entities and associates is included in the investments in jointly controlled entities and
associates respectively. Such goodwill is tested for impairment as part of the overall investment amount.
(d) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation
is calculated using the straight-line method to write-off the cost of the assets to their residual values over their estimated useful
lives. The useful lives for this purpose are as follows:
Aircraft
– engines 7 or 25 years
– airframe 7 or 25 years
– service potential 7 or 13 years
Aircraft spares 10 years
Aircraft fixtures and fittings Useful life of aircraft or remaining lease term of aircraft,
whichever is shorter
Buildings
– simulator 28.75 years
– hangar 50 years
Motor vehicles 5 years
Office equipment, furniture and fittings 5 years
Office renovation 5 years
Simulator equipment 25 years
Operating plant and ground equipment 5 years
Kitchen equipment 5 years
In flight equipment 5 years
Training equipment 5 years
Assets not yet in operation are stated at cost and are not depreciated until the assets are ready for their intended use.
Residual values, where applicable, are reviewed annually against prevailing market rates at the balance sheet date for equivalent
aged assets and depreciation rates are adjusted accordingly on a prospective basis. For the current financial year ended 31
December 2010, the estimated residual value for aircraft airframes and engines is 10% of their cost.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
161
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Property, plant and equipment (continued)
An element of the cost of an acquired aircraft is attributed on acquisition to its service potential, reflecting the maintenance
condition of its engines and airframe. This cost, which can equate to a substantial element of the total aircraft cost, is amortised
over the shorter of the period to the next checks or the remaining life of the aircraft.
The cost of subsequent major airframe and engine maintenance checks as well as upgrades to leased assets are capitalised and
amortised over the shorter of the period to the next check or the remaining life of the aircraft.
At each balance sheet date, the Group assesses whether there is any indication of impairment. If such an indication exists, an
analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying
amount exceeds the recoverable amount. See accounting policy Note 2(f) on impairment of assets.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income
statement.
Advance payments and option payments made in respect of aircraft purchase commitments and options to acquire aircraft where
the balance is expected to be funded by mortgage financing are recorded at cost. On acquisition of the related aircraft, these
payments are included as part of the cost of aircraft and are depreciated from that date.
(e) Investments
Investments in subsidiaries, jointly controlled entities and associates are stated at cost less accumulated impairment losses.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount (see Note 2(f)).
(f) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually, or as and when
events or circumstances occur indicating that an impairment may exist. Property, plant and equipment and other non-current
assets, including intangible assets with definite useful lives, are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less cost to sell and value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there
is separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed
for possible reversal at each reporting date.
Any impairment loss arising is charged to the income statement unless it reverses a previous revaluation in which case it is
charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless
it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.
(g) Maintenance and overhaul
Owned aircraft
The accounting for the cost of providing major airframe and certain engine maintenance checks for own aircraft is described in the
accounting policy for property, plant and equipment.
Leased aircraft
Where the Group has a commitment to maintain aircraft held under operating leases, provision is made during the lease term for
the rectification obligations contained within the lease agreements. The provisions are based on estimated future costs of major
airframe, certain engine maintenance checks and one-off costs incurred at the end of the lease by making appropriate charges to
the income statement calculated by reference to the number of hours or cycles operated during the financial year.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
162
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Leases
Finance leases
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are
classified as finance leases.
Finance leases are capitalised at the estimated present value of the underlying lease payments at the date of inception. Each lease
payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the balance
outstanding. The corresponding rental obligations, net of finance charges, are included in payables. The interest element of the
finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period.
Property, plant and equipment acquired under finance lease contracts are depreciated over the estimated useful life of the asset,
in accordance with the annual rates stated in Note 2(d) above. Where there is no reasonable certainty that the ownership will be
transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life.
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of incentives received from the lessor) are charged to the income
statement on a straight-line basis over the lease period.
Assets leased out by the Company under operating leases are included in property, plant and equipment in the balance sheet. They
are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental
income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.
(i) Inventories
Inventories comprising spares and consumables used internally for repairs and maintenance are stated at the lower of cost and
net realisable value.
Cost is determined on the weighted average basis, and comprises the purchase price and incidentals incurred in bringing the
inventories to their present location and condition.
Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs to completion
and applicable variable selling expenses. In arriving at net realisable value, due allowance is made for all damaged, obsolete and
slow-moving items.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
163
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets
(i) Classification
The Group has changed its accounting policy for recognition and measurement of financial assets upon the adoption of FRS
139 “Financial instruments: Recognition and Measurement” on 1 January 2010.
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables
and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term. Derivatives are
also categorised as held for trading unless they are designated as hedges.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period.
These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and
‘deposits, cash and bank balances’ in the balance sheets.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless the investment matures or management intends to dispose
of it within 12 months of the end of the reporting period.
(ii) Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to
purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets. not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and
transaction costs are expensed in profit or loss.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
164
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets (continued)
(iii) Subsequent measurement – gains and losses
Available-for-sale financial assets and financial assets through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost using the effective interest method.
Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except for
impairment losses (see accounting policy Note 2(j)(iv)) and foreign exchange gains and losses on monetary assets. The
exchange differences on monetary assets are recognised in the income statement, whereas exchange differences on non-
monetary assets are recognised in other comprehensive income as part of fair value change.
Interest and dividend income on available-for-sale financial assets are recognised separately in profit or loss. Interest on
available-for-sale debt securities calculated using the effective interest method is recognised in profit or loss. Dividend income
on available-for-sale equity instruments are recognised in the income statement when the Group’s right to receive payments
is established.
(iv) Subsequent measurement – Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition
of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
• Significant financial difficulty of the issuer or obligor;
• A breach of contract, such as a default or delinquency in interest or principal payments;
• The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession
that the lender would not otherwise consider;
• It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
• Disappearance of an active market for that financial asset because of financial difficulties; or
• Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of
financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in the income
statement. If ‘loans and receivables’ have a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on
the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the
previously recognised impairment loss is recognised in the income statement.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
165
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets (continued)
(iv) Subsequent measurement – Impairment of financial assets (continued)
When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the
necessary procedures have been completed and the amount of the loss has been determined.
Assets classified as available-for-sale
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a group of
financial assets is impaired.
In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised cost’
above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an indicator that
the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss that had been
recognised directly in equity is removed from equity and recognised in the income statement. The amount of cumulative loss
that is reclassified to the income statement is the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in the income statement. Impairment losses recognised in the
income statement on equity instruments classified as available-for-sale are not reversed through the income statement.
The Group has applied the policy according to the transitional provisions of FRS 139 by re-measuring all financial assets, as
appropriate, and recording any adjustments to the previous carrying amounts to opening retained earnings or, if appropriate,
another category of equity, of the current financial year. Comparatives for financial instruments have not been adjusted and
therefore the corresponding balances are not comparable. Refer to Note 40 for the impact of this change in accounting
policy.
(v) De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive
income are reclassified to profit or loss.
(k) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset
and settle the liability simultaneously.
(l) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured
at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:
(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow
hedge).
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
166
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Derivative financial instruments and hedging activities (continued)
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as
well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 30. The full fair value of a hedging
derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current
asset or liability when the remaining maturity of the hedged item is less than 12 months.
(a) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to
the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in the income statement within ‘finance
costs’. The gain or loss relating to the ineffective portion is recognised in the income statement within ‘other gains/(losses) –
net’. Changes in the fair value of the hedge fixed rate borrowings attributable to interest rate risk are recognised in the income
statement within ‘finance costs’.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for
which the effective interest method is used is amortised to the income statement over the period to maturity.
(b) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in
the income statement within ‘other gains/(losses) – net’.
Amounts accumulated in equity are reclassified to the income statement in the periods when the hedged item affects profit
or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of
interest rate swaps hedging variable rate borrowings is recognised in the income statement within ‘revenue’.
However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory
or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included
in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in
the case of inventory or in depreciation in the case of property, plant and equipment.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement within ‘other gains/(losses) –
net’.
The Group has applied the policy according to the transitional provisions of FRS 139 by recognising and measuring derivatives,
as appropriate, and recording any adjustments to the previous carrying amounts to the opening retained earnings or, if
appropriate, another category of equity, of the current financial year. Comparatives for financial instruments have not been
adjusted and therefore the corresponding balances are not comparable. Refer to Note 40 for the impact of this change in
accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
167
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current
assets. Otherwise, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less allowance for impairment.
Cash and cash equivalents
For the purpose of the cash flow statements, cash and cash equivalents comprise cash on hand, bank balances, demand deposits
and other short term, highly liquid investments with original maturities of three months or less, less bank overdrafts. Deposits held
as pledged securities for term loans granted are not included as cash and cash equivalents.
(o) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is
probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be
made. Provisions are not recognised for future operating losses.
(p) Share capital
(i) Classification
Ordinary shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liability
according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified
as an equity instrument are charged directly to equity.
(ii) Share issue costs
Incremental external costs directly attributable to the issuance of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
(iii) Dividends to shareholders of the Company
Dividends on ordinary shares are recognised as a liability in the period in which they are declared. A dividend declared after the
end of the reporting period, but before the financial statements are authorised for issue, is not recognised as a liability at the
end of the reporting period.
(q) Borrowings
Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. The finance costs, which
represent the difference between the net proceeds and the total amount of the payments of these borrowings, are allocated to
periods over the term of the borrowings at a constant rate on the carrying amount and are charged to the income statement.
Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported
within finance cost in the income statement.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the balance sheet date.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
168
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Income taxes
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all
taxes based upon the taxable profits, including withholding taxes payable by foreign subsidiaries, jointly controlled entities or
associates.
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to
assets and liabilities for tax purposes and their carrying amounts in the financial statements.
Deferred tax assets are recognised for the carry forward of unused tax losses and tax credits (including investment tax allowances)
to the extent that it is probable that taxable profits will be available against which the unutilised tax losses and unused tax credits
can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, jointly controlled entities and associates
except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
The Group’s share of income taxes of jointly controlled entities and associates are included in the Group’s share of results of jointly
controlled entities and associates.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
(s) Employee benefits
(i) Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the financial year in
which the associated services are rendered by the employees of the Group.
(ii) Defined contribution plan
The Group’s contributions to the Employees’ Provident Fund are charged to the income statement in the financial year to which
they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) Share based payments
FRS 2 – Share-based Payment requires recognition of share-based payment transactions including the value of share options
in the financial statements. There is no impact on the financial statements of the Group following the prospective application
of FRS 2 in 2006 as all the share options of the Company were fully vested prior to the effective date of the standard.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
169
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) Revenue recognition
Scheduled passenger flight and chartered flight income are recognised upon the rendering of transportation services and where
applicable, are stated net of discounts. The value of seats sold for which services have not been rendered is included in current
liabilities as sales in advance. Revenue from aircraft rentals is recorded on a straight-line basis over the term of the lease.
Other revenue which includes fuel surcharge, insurance surcharge, administrative fees, excess baggage and baggage handling
fees, are recognised upon the completion of services rendered and where applicable, are stated net of discounts. Freight and
other related revenue are recognised upon the completion of services rendered and where applicable, are stated net of discounts.
Income from the provision of tour operations (both inbound and outbound) and travel agency services is recognised upon services
being rendered and where applicable, are stated net of discounts.
Rental income is recognised on an accrual basis.
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of
the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables are
recognised using the original effective interest rate.
(u) Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to
shareholders’ equity. When a foreign operation is disposed of or sold, such exchange differences that were recorded in equity are
recognised in the income statement as part of the gain or loss on disposal.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
170
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Contingent liabilities
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is
a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control
of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be
recognised because it cannot be measured reliably.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interests.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination
where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be
reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date
of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 137 ‘Provisions,
Contingent Liabilities and Contingent Assets’ and the amount initially recognised less, when appropriate, cumulative amortisation
recognised in accordance with FRS 118 ‘Revenue’.
(w) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-marker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the management committee that makes strategic decisions.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal
the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have a
material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next year are explained below.
(i) Estimated useful lives and residual values of aircraft frames and engines
The Group reviews annually the estimated useful lives and residual values of aircraft frames and engines based on factors such as
business plans and strategies, expected level of usage, future technological developments and market prices.
Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors
mentioned above. A reduction in the estimated useful lives and residual values of aircraft frames and engines as disclosed in Note
2(d), would increase the recorded depreciation charge and decrease the carrying amount of property, plant and equipment.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
171
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)
(ii) Deferred tax assets
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
temporary differences can be utilised. Estimating the future taxable profits involves significant assumptions, especially in respect
of fares, load factor, fuel price, maintenance costs and currency movements. These assumptions have been built based on past
performance and adjusted for non-recurring circumstances and a reasonable growth rate. However, even where the actual taxable
profits in the future are 5 percent lower than the anticipated taxable profits, the deferred tax assets can still be fully utilised.
(iii) Recoverability of intercompany balances
The Group has investments in Thai AirAsia Co. Ltd and PT Indonesia AirAsia, both of which provide air transportation services, as
disclosed in Notes 14 and 15 to the financial statements respectively. As at the balance sheet date, the amounts owing by these
related parties amounted to RM99.8 million (2009: RM366.4 million) and RM268.1 million (2009: RM445.8 million) respectively.
No allowances for impairment have been provided for these balances as the Directors are of the view that these related parties
would have sufficient future funds to repay these debts, based on the projected cash flows of these entities.
(iv) Valuation of available-for-sale equity investments
The Group has an investment in an unquoted corporation, AirAsia X Sdn Bhd, which was previously classified as other investments
and is now categorised within available-for-sale financial assets upon the adoption of FRS 139. The Group follows the guidance
of FRS 139 to determine when the valuation of an available-for-sale equity investment and if it is impaired. This determination
requires a high degree of subjectivity and significant judgment. In making this judgment, the Group is dependent on the key bases
and assumptions which include, among other factors, the prices of fuel, fares, load factor, currency movements; and the financial
health of and short term business outlook for the investee, including factors such as industry and route performance, changes in
technology and operational and financing cash flows.
4 REVENUE
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Passenger seat sales 2,830,920 2,138,011 2,830,920 2,138,011
Aircraft operating lease income 395,943 320,332 395,943 320,332
Surcharges and fees 13,938 261,193 13,938 261,193
Travel and tour operations 83,636 60,852 – –
Other revenue 623,658 352,513 623,658 352,513
3,948,095 3,132,901 3,864,459 3,072,049
Other revenue includes excess baggage, baggage handling fee, freight and cancellation, documentation and booking fees amounting to
RM539.9 million (2009: RM304.0 million) for the Group and Company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
172
5 STAFF COSTS
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Wages, salaries, bonus and allowances 318,316 279,707 316,642 278,379
Defined contribution retirement plan 42,469 26,295 42,299 26,172
360,785 306,002 358,941 304,551
Included in staff costs is Executive Directors’ remuneration which is analysed as follows:
Group and Company
2010 2009
RM’000 RM’000
Executive Directors
– basic salaries, bonus and allowances 14,400 8,640
– defined contribution plan 1,728 1,037
Non-executive Directors
– fees 2,203 983
18,331 10,660
The remuneration payable to the Directors of the Company is analysed as follows:
Executive Non-executive
2010 2009 2010 2009
Range of remuneration
RM100,001 to RM150,000 – – – 3
RM150,001 to RM200,000 – – – 3
RM300,001 to RM350,000 – – 2 –
RM350,001 to RM400,000 – – 3 –
RM450,001 to RM500,000 – – 1 –
RM4,000,001 to RM5,000,000 – 1 – –
RM5,000,001 to RM6,000,000 – 1 – –
RM7,000,001 to RM8,000,000 1 – – –
RM8,000,001 to RM9,000,000 1 – – –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
173
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
5 STAFF COSTS (CONTINUED)
Set out below are details of outstanding options over the ordinary shares of the Company granted under the ESOS to the Directors:
Exercise
Expiry price At At
Grant date date RM/share 1.1.2010 Exercised Lapsed 31.12.2010
’000 ’000 ’000 ’000
1 September 2004 6 June 2014 1.08 1,200 – – 1,200
2010 2009
’000 ’000
Number of share options vested at balance sheet date 1,200 1,200
During the previous financial year, the exercise period of the ESOS which expired on 6 June 2009 was extended for a further 5 years to
6 June 2014.
6 OTHER OPERATING EXPENSES
The following items have been charged/(credited) in arriving at other operating expenses:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Property, plant and equipment
– Write off – 388 – 388
– Impairment 6,996 – 6,996 –
Rental of land and building 10,877 4,181 10,877 4,157
Auditors’ remuneration
– audit fees 586 467 556 438
– audit related fees 255 10 255 10
– non-audit fees 1,494 51 1,494 51
Rental of equipment 2,151 1,475 2,151 1,475
Advertising costs 28,993 33,702 26,008 33,387
Amortisation of long term prepayments 24,741 9,645 24,741 9,645
Amortisation of other investments 12 11 12 11
Net foreign exchange (gain)/loss
– Realised (7,125) (49,020) (7,489) (49,968)
– Unrealised 64,601 36,168 64,596 36,168
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
174
7 OTHER LOSSES – NET
Group and Company
2010 2009
RM’000 RM’000
Interest rate contracts – Held for trading (42,585) –
Forward foreign exchange contracts – Held for trading 25,391 –
Fuel contracts – Held for trading 832 –
Ineffectiveness on cash flow hedges (Note 30) (6,054) –
Total (22,416) –
8 OTHER INCOME
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Gain on disposals of property, plant and equipment 1,311 30,696 1,311 30,696
Others 34,632 71,687 34,056 71,687
35,943 102,383 35,367 102,383
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
175
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
9 FINANCE INCOME/(COSTS)
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Finance income:
Foreign exchange gains on borrowings
– Realised – 2,295 – 2,295
– Unrealised 741,334 75,910 741,334 75,910
Interest income
– deposits with licensed banks 826 1,009 826 1,009
– short term deposits with fund management companies 2,692 627 2,692 627
– interest income on amounts due from
associates and jointly controlled entities 53,925 – 53,925 –
– other interest income 9,256 4,664 9,246 4,621
808,033 84,505 808,023 84,462
Finance costs:
Realised foreign exchange loss on borrowings (29,208) – (29,208) –
Unrealised foreign exchange loss on amounts due from
associates and jointly controlled entities (89,978) – (89,978) –
Fair value losses on derivative financial instruments (272,612) – (272,612) –
Interest expense
– bank borrowings (374,364) (371,141) (374,364) (371,141)
– amortisation of premiums for interest rate caps (7,750) – (7,750) –
– hire-purchase payables (10) (12) (10) (12)
Bank facilities and other charges (2,216) (3,818) (2,212) (3,818)
(776,138) (374,971) (776,134) (374,971)
Net finance income/(costs) 31,895 (290,466) 31,889 (290,509)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
176
10 TAXATION
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Current taxation
– Malaysian tax 13,240 12,301 13,226 12,301
– Foreign tax 2,967 1,805 2,967 1,805
Overprovision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Deferred taxation (Note 19) 32,014 104,835 32,014 104,835
37,445 116,021 37,431 116,021
Current taxation
– Current financial year 16,207 14,106 16,193 14,106
– Overprovision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Deferred taxation
– Origination and reversal of temporary differences 197,852 121,581 197,852 121,581
– Tax incentives (165,838) (16,746) (165,838) (16,746)
37,445 116,021 37,431 116,021
The current taxation charge is in respect of interest income which is assessed separately.
The explanation of the relationship between taxation and profit before taxation is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Tax calculated at Malaysian tax rate of 25% (2009: 25%) 274,714 155,572 273,127 154,505
Tax effects of:
– expenses not deductible for tax purposes 18,078 2,559 19,651 3,626
– income not subject to tax (79,245) (23,268) (79,245) (23,268)
– temporary differences not recognised within the pioneer period 512 824 512 824
– tax incentives (165,838) (16,746) (165,838) (16,746)
– over provision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Taxation 37,445 116,021 37,431 116,021
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
177
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
11 EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit for the financial year by the weighted average number of ordinary
shares in issue during the financial year.
Group
2010 2009
Profit for the financial year (RM’000) 1,061,411 506,267
Weighted average number of ordinary shares in issue (‘000) 2,761,637 2,456,443
Earnings per share (sen) 38.4 20.6
(b) Diluted earnings per share
For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares.
The Group has dilutive potential ordinary shares arising from the Company’s share options granted to employees.
In assessing the dilution in earnings per share arising from the issue of share options, a computation is performed to determine
the number of shares that could have been acquired at fair value (determined as the average annual market share price of the
Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. This
computation serves to determine the “bonus” element to the ordinary shares outstanding for the purpose of computing the
dilution. No adjustment is made to net profit for the financial year in the calculation of the diluted earnings per share from the issue
of the share options.
The number of shares calculated as above is compared with the number of shares that would have been issued assuming the
exercise of the share options.
Group
2010 2009
Profit for the financial year (RM’000) 1,061,411 506,267
Weighted average number of ordinary shares in issue (‘000) 2,761,637 2,456,443
Adjustment for ESOS (‘000) 8,644 –
Weighted average number of ordinary shares for diluted earnings per share 2,770,281 2,456,443
Diluted earnings per share (sen) 38.3 20.6
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
178
12 PROPERTY, PLANT AND EQUIPMENT
At Reclassi- Depreciation At 31
1 January 2010 Additions fications Impairment charge December 2010
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Net book value
Aircraft engines, airframe
and service potential 7,676,107 1,847,573 – (6,996) (471,060) 9,045,624
Aircraft spares 118,694 27,118 – – (20,031) 125,781
Aircraft fixtures and fittings 28,342 5,902 – – (11,481) 22,763
Buildings 37,990 842 – – (1,445) 37,387
Motor vehicles 4,961 4,282 – – (2,461) 6,782
Office equipment,
furniture and fittings 11,208 11,990 – – (4,581) 18,617
Office renovation 2,870 1,458 – – (1,510) 2,818
Simulator equipment 47,670 58 – – (2,044) 45,684
Operating plant and
ground equipment 10,989 2,419 566 – (4,566) 9,408
Kitchen equipment 194 – – – – 194
In flight equipment 423 826 – – (192) 1,057
Training equipment 2,174 365 – – (613) 1,926
Assets not yet in operation 566 – (566) – – –
7,942,188 1,902,833 – (6,996) (519,984) 9,318,041
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Group
At 31 December 2010
Aircraft engines, airframe and service potential 10,469,160 (1,423,536) 9,045,624
Aircraft spares 195,155 (69,374) 125,781
Aircraft fixtures and fittings 71,504 (48,741) 22,763
Buildings 41,204 (3,817) 37,387
Motor vehicles 18,619 (11,837) 6,782
Office equipment, furniture and fittings 49,116 (30,499) 18,617
Office renovation 10,655 (7,837) 2,818
Simulator equipment 55,988 (10,304) 45,684
Operating plant and ground equipment 28,121 (18,713) 9,408
Kitchen equipment 202 (8) 194
In flight equipment 1,385 (328) 1,057
Training equipment 3,098 (1,172) 1,926
10,944,207 (1,626,166) 9,318,041
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
179
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At Reclassi- Depreciation At 31
1 January 2009 Additions fications Write off Disposals charge December 2009
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Net book value
Aircraft engines, airframe
and service potential 6,337,262 1,894,583 (102) – (151,810) (403,826) 7,676,107
Aircraft spares 100,820 33,491 – – – (15,617) 118,694
Aircraft fixtures and fittings 36,784 3,290 – – – (11,732) 28,342
Buildings 13,982 – 24,528 – – (520) 37,990
Motor vehicles 5,194 2,149 – – – (2,382) 4,961
Office equipment, furniture
and fittings 10,208 5,662 83 – – (4,745) 11,208
Office renovation 2,814 1,609 – – – (1,553) 2,870
Simulator equipment 49,740 168 – – – (2,238) 47,670
Operating plant and ground
equipment 11,772 3,998 102 (388) (32) (4,463) 10,989
Kitchen equipment 194 – – – – – 194
In flight equipment 308 216 – – – (101) 423
Training equipment 620 2,021 – – – (467) 2,174
Assets not yet in operation 24,601 576 (24,611) – – – 566
6,594,299 1,947,763 – (388) (151,842) (447,644) 7,942,188
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Group
At 31 December 2009
Aircraft engines, airframe
and service potential 8,628,583 (952,476) 7,676,107
Aircraft spares 168,037 (49,343) 118,694
Aircraft fixtures and fittings 65,602 (37,260) 28,342
Buildings 40,362 (2,372) 37,990
Motor vehicles 14,337 (9,376) 4,961
Office equipment, furniture and fittings 37,126 (25,918) 11,208
Office renovation 9,197 (6,327) 2,870
Simulator equipment 55,930 (8,260) 47,670
Operating plant and ground equipment 25,136 (14,147) 10,989
Kitchen equipment 202 (8) 194
In flight equipment 559 (136) 423
Training equipment 2,733 (559) 2,174
Assets not yet in operation 566 – 566
9,048,370 (1,106,182) 7,942,188
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
180
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At At
1 January Reclassi- Depreciation 31 December
2010 Additions fications Impairment charge 2010
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Net book value
Aircraft engines, airframe and
service potential 7,676,107 1,847,573 – (6,996) (471,060) 9,045,624
Aircraft spares 118,694 27,118 – – (20,031) 125,781
Aircraft fixtures and fittings 28,342 5,902 – – (11,481) 22,763
Buildings 37,990 842 – – (1,445) 37,387
Motor vehicles 4,356 4,282 – – (2,461) 6,177
Office equipment, furniture and fittings 11,112 11,431 – – (4,556) 17,987
Office renovation 2,870 1,437 – – (1,509) 2,798
Simulator equipment 47,670 58 – – (2,044) 45,684
Operating plant and ground equipment 10,989 2,419 566 – (4,566) 9,408
In flight equipment 423 826 – – (192) 1,057
Training equipment 2,174 365 – – (613) 1,926
Assets not yet in operation 566 – (566) – – –
7,941,293 1,902,253 – (6,996) (519,958) 9,316,592
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Company
At 31 December 2010
Aircraft engines, airframe
and service potential 10,469,160 (1,423,536) 9,045,624
Aircraft spares 195,155 (69,374) 125,781
Aircraft fixtures and fittings 71,504 (48,741) 22,763
Buildings 41,204 (3,817) 37,387
Motor vehicles 18,021 (11,844) 6,177
Office equipment, furniture and fittings 48,462 (30,475) 17,987
Office renovation 10,634 (7,836) 2,798
Simulator equipment 55,988 (10,304) 45,684
Operating plant and ground equipment 28,121 (18,713) 9,408
In flight equipment 1,385 (328) 1,057
Training equipment 3,098 (1,172) 1,926
10,942,732 (1,626,140) 9,316,592
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
181
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At 1 Reclassi- Depreciation At 31
January 2009 Additions fications Write off Disposals charge December 2009
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Net book value
Aircraft engines, airframe
and service potential 6,337,262 1,894,583 (102) – (151,810) (403,826) 7,676,107
Aircraft spares 100,820 33,491 – – – (15,617) 118,694
Aircraft fixtures and fittings 36,784 3,290 – – – (11,732) 28,342
Buildings 13,982 – 24,528 – – (520) 37,990
Motor vehicles 4,589 2,149 – – – (2,382) 4,356
Office equipment, furniture
and fittings 10,122 5,645 83 – – (4,738) 11,112
Office renovation 2,814 1,609 – – – (1,553) 2,870
Simulator equipment 49,740 168 – – – (2,238) 47,670
Operating plant and ground
equipment 11,772 3,998 102 (388) (32) (4,463) 10,989
In flight equipment 308 216 – – – (101) 423
Training equipment 620 2,021 – – – (467) 2,174
Assets not yet in operation 24,601 576 (24,611) – – – 566
6,593,414 1,947,746 – (388) (151,842) (447,637) 7,941,293
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Company
At 31 December 2009
Aircraft engines, airframe
and service potential 8,628,583 (952,476) 7,676,107
Aircraft spares 168,037 (49,343) 118,694
Aircraft fixtures and fittings 65,602 (37,260) 28,342
Buildings 40,362 (2,372) 37,990
Motor vehicles 13,732 (9,376) 4,356
Office equipment, furniture and fittings 37,031 (25,919) 11,112
Office renovation 9,197 (6,327) 2,870
Simulator equipment 55,930 (8,260) 47,670
Operating plant and ground equipment 25,136 (14,147) 10,989
In flight equipment 559 (136) 423
Training equipment 2,733 (559) 2,174
Assets not yet in operation 566 – 566
9,047,468 (1,106,175) 7,941,293
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
182
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Included in property, plant and equipment of the Group and the Company are assets with the following net book values:
Group and Company
2010 2009
RM’000 RM’000
Net book value of owned aircraft sub-leased out 3,445,485 2,458,972
Aircraft pledged as security for borrowings (Note 29) 9,030,028 7,643,739
Simulator pledged as security for borrowings (Note 29) 41,371 43,409
Motor vehicles on hire-purchase 16 76
The beneficial ownership and operational control of aircraft pledged as security for borrowings rests with the Company when the aircraft
is delivered to the Company.
Where the legal title to the aircraft is held by financiers during delivery, the legal title will be transferred to the Company only upon
settlement of the respective facilities.
13 INVESTMENT IN SUBSIDIARIES
Company
2010 2009
RM’000 RM’000
Unquoted investments, at cost 25,384 22,194
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
183
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
13 INVESTMENT IN SUBSIDIARIES (CONTINUED)
The details of the subsidiaries are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
Directly held by the Company
Crunchtime Culinary Services
Sdn Bhd (“Crunchtime”)
Malaysia 100.0 100.0 Provision of in flight meals, currently dormant
AA International Ltd (“AAIL”) * Malaysia 100.0 100.0 Investment holding
AirAsia Go Holiday Sdn Bhd Malaysia 100.0 100.0 Tour operating business
AirAsia (Mauritius) Limited
(“AirAsia Mauritius”) *
Mauritius 100.0 100.0 Providing aircraft leasing facilities to Thai AirAsia Co.
Ltd
Airspace Communications
Sdn Bhd (“Airspace”)
Malaysia 100.0 100.0 Media owner with publishing division,
AirAsia (B) Sdn Bhd * Negara Brunei
Darussalam
100.0 100.0 Providing air transportation services, currently
dormant
AirAsia Corporate Services
Limited *
Malaysia 100.0 100.0 Facilitate business transactions for AirAsia Group
with non-resident goods and service providers
Aras Sejagat Sdn Bhd Malaysia 100.0 100.0 Special purpose vehicle for financing arrangements
required by AirAsia
Koolred Sdn Bhd Malaysia 100.0 – Dormant
Asia Air Limited * United Kingdom 100.0 100.0 To provide and promote AirAsia’s in flight food to the
European market
Held by AAIL
AirAsia (Hong Kong) Limited
(“AirAsia HK”) *
Hong Kong 100.0 100.0 Dormant
AA Capital Ltd * Malaysia 100.0 100.0 Dormant
* Not audited by PricewaterhouseCoopers, Malaysia
14 INVESTMENT IN A JOINTLY CONTROLLED ENTITY
Group
2010 2009
RM’000 RM’000
Represented by:
Unquoted investment, at cost 12,054 12,054
Group’s share of post acquisition reserves (12,054) (12,054)
– –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
184
14 INVESTMENT IN A JOINTLY CONTROLLED ENTITY (CONTINUED)
The details of the jointly controlled entity are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
Held by AAIL
Thai AirAsia Co. Ltd
(“Thai AirAsia”)
Thailand 48.9 48.9 Aerial transport of persons, things and posts
The Group’s share of the results of the jointly controlled entity, which has not been equity accounted for, is as follows:
2010 2009
RM’000 RM’000
Revenue 611,530 458,065
Expenses (471,087) (412,023)
Profit/(loss) before taxation 140,443 (46,042)
Taxation – –
Net profit/(loss) for the financial year 140,443 (46,042)
The Group’s share of assets and liabilities of the jointly controlled entity is as follows:
2010 2009
RM’000 RM’000
Non-current assets 14,597 14,242
Current assets 82,601 89,855
Current liabilities (217,168) (364,510)
Share of net liabilities of the jointly controlled entity (119,970) (260,413)
The Group discontinued recognition of its share of further losses made by Thai AirAsia as the Group’s interest in the jointly controlled
entity has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the jointly
controlled entity. As at 31 December 2010, the unrecognised amount of the Group’s share of losses of Thai AirAsia which has not been
equity accounted for amounted to RM127.8 million (2009: RM268.2 million).
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
185
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
15 INVESTMENT IN ASSOCIATES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Unquoted investment, at cost 4,141 4,141 29 29
Group’s share of post acquisition losses (4,112) (4,112) – –
29 29 29 29
The details of the associates are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
AirAsia Philippines Inc Philippines 39.9 39.9 Providing air transportation
Services, currently dormant
AirAsia Pte Ltd (“AAPL”) Singapore 48.9 48.9 Dormant
Asian Contact Centres Sdn. Bhd. Malaysia 50.0 50.0 Providing end-to-end solutions for customers contact
management and contact centre
Held by AAIL
PT Indonesia AirAsia (“IAA”) Indonesia 48.9 48.9 Commercial air transport service
AirAsia Go Holiday Co. Ltd Thailand 49.0 49.0 Tour operating business, currently dormant
The Group’s share of the results of associates, which has not been equity accounted for, is as follows:
2010 2009
RM’000 RM’000
Revenue 463,176 338,931
Expenses (383,380) (459,533)
Profit/(loss) before taxation 79,796 (120,602)
Taxation – –
Net profit/(loss) for the financial year 79,796 (120,602)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
186
15 INVESTMENT IN ASSOCIATES (CONTINUED)
The Group’s share of assets and liabilities of the associates is as follows:
2010 2009
RM’000 RM’000
Non-current assets 17,705 18,222
Current assets 13,491 21,376
Current liabilities (229,116) (317,314)
Non-current liabilities (23,354) (23,354)
Share of net liabilities of associates (221,274) (301,070)
The Group discontinued recognition of its share of further losses made by IAA as the Group’s interest in this associate has been reduced
to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the associate. As at 31 December
2010, the unrecognised amounts of the Group’s share of losses of IAA which have not been equity accounted for amounted to RM196.6
million (2009: RM276.4 million).
16 AVAILABLE-FOR-SALE FINANCIAL ASSETS
Group and Company
2010 2009
RM’000 RM’000
Non-current
At 1 January – as previously stated – –
Effects of adoption of FRS 139 (Note 40) 132,663 –
At 1 January (restated) 132,663 –
Additions 16,000 –
Fair value gain – recognised in other comprehensive income 4,279 –
At 31 December 152,942 –
Investment in an unquoted corporation, AirAsia X Sdn Bhd, which was previously classified as other investment (Note 17) is categorised
as available-for-sale financial assets upon the adoption of FRS 139.
During the financial year, the Group acquired a further of 16,000,000 redeemable convertible preference shares Series 1 (“RCPS”) of
RM1.00 each at par in AirAsia X Sdn Bhd.
The fair value of the investment is based on the price earnings ratio (PER) of listed comparable companies. The maximum exposure to
credit risk at the reporting date is the carrying value of the security. This financial asset is neither past due nor impaired.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
187
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
17 OTHER INVESTMENTS
Group and Company
2010 2009
RM’000 RM’000
Non-current:
Recreational golf club membership 25 37
Investment in AirAsia X Sdn Bhd – 26,667
25 26,704
With the adoption of FRS 139 effective from 1 January 2010, other investments are now classified as available-for-sale financial assets
(see Note 16).
Group and Company
2010 2009
RM’000 RM’000
At 1 January – as previously stated 26,704 26,715
Effects of adoption of FRS 139 (26,667) –
At 1 January (restated) 37 26,715
Amortisation of other investments (12) (11)
At 31 December 25 26,704
18 GOODWILL
Group
RM’000
Cost/net book value
At 31 December 2009/31 December 2010 8,738
The Group undertakes an annual test for impairment of goodwill. The carrying amount of goodwill is allocated to the Group’s cash
generating unit, which primarily comprised the investment in a subsidiary, AAIL. No impairment loss was required for the carrying amount
of goodwill assessed as at 31 December 2010 as the recoverable amount is in excess of the carrying amount.
Key assumptions used in the value-in-use calculations
The recoverable amount of the cash-generating unit including goodwill is determined based on the value-in-use calculation. This value-in-
use calculation applies a discounted cash flow model using cash flow projections covering a five-year period for the subsidiary’s business
operations. The projections reflect the subsidiary’s expectation of revenue growth, operating costs and margins of its investment based
on past experience and current assessment of market share, expectation of market growth and industry growth.
For purposes of the value-in-use calculation, a discount rate of 10% per annum has been applied. The discount rate reflects an
independent market rate applicable to the operations of the cash generating unit.
Impact of possible change in key assumptions
Sensitivity analysis shows that no impairment loss is required for the carrying amount of goodwill, including where realistic variations
are applied to key assumptions.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
188
19 DEFERRED TAXATION
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are
shown in the balance sheets:
Group and Company
2010 2009
RM’000 RM’000
Deferred tax assets 719,260 751,274
The movements in the deferred tax assets and liabilities of the Group and the Company during the financial year are as follows:
Group and Company
2010 2009
RM’000 RM’000
At start of financial year 751,274 856,109
(Charged)/credited to income statement (Note 10)
– Property, plant and equipment (197,852) (58,874)
– Tax incentives 165,838 16,746
– Tax losses – (24,779)
– Provisions – (37,928)
(32,014) (104,835)
At end of financial year 719,260 751,274
Deferred tax assets (before offsetting)
Tax incentives 991,735 825,897
Tax losses 9,171 9,171
1,000,906 835,068
Offsetting (281,646) (83,794)
Deferred tax assets (after offsetting) 719,260 751,274
Deferred tax liabilities (before offsetting)
Property, plant and equipment (281,646) (83,794)
Offsetting 281,646 83,794
Deferred tax liabilities (after offsetting) – –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
189
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
19 DEFERRED TAXATION (CONTINUED)
As disclosed in Note 3 to the financial statements in respect of critical accounting estimates and judgments, the deferred tax assets are
recognised on the basis of the Company’s previous history of recording profits, and to the extent that it is probable that future taxable
profits will be available against which temporary differences can be utilised. Estimating the future taxable profits involves significant
assumptions, especially in respect of fares, load factor, fuel price, maintenance costs and currency movements. These assumptions
have been built based on past performance and adjusted for non-recurring circumstances and a reasonable growth rate.
On 27 May 2010, the Ministry of Finance, granted approval to the Company under Section 127 of Income Tax Act, 1967 for income tax
exemption in the form of an Investment Allowance (“IA”) of 60% on qualifying expenditure incurred within a period of 5 years commencing
1 July 2009 to 30 June 2014, to be set off against 70% of statutory income for each year of assessment. In the previous financial year,
management had not recognised any IA beyond 30 June 2009 as the likelihood of successfully renewing this incentive was not known at
that juncture. IA in respect of four aircraft that were acquired between July and December 2009 has now been recognised in the deferred
tax assets computation as at 31 December 2010.
20 RECEIVABLES AND PREPAYMENTS
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Non-current:
Long term prepayments 23,593 23,593 23,593 23,593
Current:
Trade receivables 105,325 70,520 93,911 70,530
Less: Allowance for impairment (1,994) (1,994) (1,994) (1,994)
103,331 68,526 91,917 68,536
Other receivables 124,045 114,161 110,815 113,870
Less: Allowance for impairment (1,072) (1,072) (1,072) (1,072)
122,973 113,089 109,743 112,798
Prepayments 326,049 250,997 325,516 250,408
Deposits 288,769 288,470 288,745 287,866
841,122 721,082 815,921 719,608
Credit terms of trade receivables range from 0 to 60 days.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
190
20 RECEIVABLES AND PREPAYMENTS (CONTINUED)
As of 31 December 2010, the Group’s trade receivables of RM103,331,000 consist of RM78,543,000 that is neither past due nor
impaired and RM24,788,000 that is past due but not impaired. These relate to a number of independent customers for whom there is
no recent history of default. The ageing analysis of these trade receivables that is past due but not impaired is as follows:
Group
2010
RM’000
Up to 3 months 9,430
Over 3 months 15,358
24,788
As of 31 December 2010, trade receivables of RM1,994,000 were impaired and provided for. The amount of the allowance was
RM1,994,000 as of 31 December 2010.
The currency exposure profile of receivables and deposits (excluding prepayments) is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
RM 122,123 118,805 97,466 117,920
USD 353,417 343,374 353,417 343,374
Others 39,533 7,906 39,522 7,906
515,073 470,085 490,405 469,200
Included in long term prepayments is prepaid lease rental, which is charged to the income statements over the term of the lease of the
low cost carrier terminal building.
Included in deposits are cash collateral for derivatives and deposits to lessors for maintenance of aircraft amounting to RM215.8 million
(2009: RM192.8 million) for the Group and Company.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group
does not hold any collateral as security.
The carrying amounts of the Group’s and the Company’s trade and other receivables approximate their fair values.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
191
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
21 AMOUNTS DUE FROM/(TO) A JOINTLY CONTROLLED ENTITY
The amount due from Thai AirAsia Co. Ltd (“TAA”), the jointly controlled entity, is denominated in US Dollar, unsecured, has no fixed
terms of repayment and is interest bearing at a rate equivalent to the Company’s borrowing rate. The amount due from TAA was charged
interest at 6% per annum with effect from 1 January 2010.
The analysis of the movements in the amount due from a jointly controlled entity for the financial year ended 31 December 2010 is as
follows:
Group
2010 2009
RM’000 RM’000
Current
At 1 January as previously stated 366,388 309,683
Effects of adoption of FRS 139 (15,462) –
At 1 January (restated) 350,926 309,683
Recharges and other expenses 468,082 385,238
Receipts and settlements (684,781) (312,459)
Foreign exchange loss on translation (39,424) (16,074)
Unwinding of discount on receivables per FRS 139 4,999 –
At 31 December 99,802 366,388
The amount due to the jointly controlled entity at the Company level of RM322.6 million (2009: Nil) is interest free and offsets against
amounts receivable from subsidiaries upon consolidation.
22 AMOUNTS DUE FROM/(TO) ASSOCIATES
The amounts due from associates are unsecured with no fixed terms of repayment and are interest bearing at a rate equivalent to the
Company’s borrowing rate. An amount of RM117,964,000 (2009: RM253,037,000) is repayable after 12 months. An amount due from
an associate company was charged interest at 6% per annum with effect from 1 January 2010.
The analysis of the movements in the amounts due from associates for the financial year ended 31 December 2010 is as follows:
Group
2010 2009
RM’000 RM’000
Current
At 1 January 456,967 387,647
Effects of adoption of FRS 139 (16,841) –
At 1 January (restated) 440,126 387,647
Recharges and other expenses 520,800 490,403
Receipts and settlements (618,226) (404,639)
Foreign exchange loss on translation (66,998) (16,444)
Unwinding of discount on receivables per FRS 139 4,648 –
At 31 December 280,350 456,967
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
192
22 AMOUNTS DUE FROM/(TO) ASSOCIATES (CONTINUED)
The currency exposure profile of the amounts due from/(to) associates is as follows:
Group and Company
2010 2009
RM’000 RM’000
Amounts due from associates
– USD 268,058 445,776
– Philippines Peso (“PHP”) 12,292 11,191
280,350 456,967
Amount due to an associate
– Singapore Dollar (“SGD”) (5,223) (3,382)
23 INVENTORIES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Spares and consumables 14,304 18,050 14,304 18,050
In flight merchandise and others 3,249 2,814 2,701 2,266
17,553 20,864 17,005 20,316
24 AMOUNTS DUE FROM SUBSIDIARIES AND A RELATED PARTY
The amounts due from subsidiaries are unsecured, interest bearing and have no fixed terms of repayment.
The amount due from a related party in the previous financial year was denominated in Ringgit Malaysia, unsecured, interest free and
had no fixed terms of repayment.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
193
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
25 CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statements, cash and cash equivalents include the following:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Cash and bank balances 681,859 254,207 676,303 253,240
Deposits with licensed banks 719,439 391,478 719,439 391,478
Short-term deposits with fund management companies 103,319 100,627 103,319 100,627
Deposits, cash and bank balances 1,504,617 746,312 1,499,061 745,345
Deposits pledged as securities (28,789) (27,847) (28,789) (27,847)
1,475,828 718,465 1,470,272 717,498
The currency exposure profile of deposits, cash and bank balances is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Malaysian Ringgit 784,672 526,688 783,031 525,721
United States Dollar 211,677 121,107 207,851 121,107
Singapore Dollar 172,680 37,246 172,640 37,246
Australian Dollar 118,327 – 118,327 –
Chinese Yuan 63,898 21,143 63,898 21,143
Hong Kong Dollar 63,428 1,843 63,428 1,843
Indian Rupee 41,802 5,729 41,802 5,729
Thai Baht 17,403 20,591 17,361 20,591
Indonesian Rupiah 10,691 1,785 10,691 1,785
Brunei Dollar 9,288 8,047 9,288 8,047
Euro 397 778 392 778
Others 10,354 1,355 10,352 1,355
1,504,617 746,312 1,499,061 745,345
The deposits with licensed banks are pledged as security for banking facilities granted to the Company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
194
25 CASH AND CASH EQUIVALENTS (CONTINUED)
The weighted average effective interest rates of deposits at the balance sheet dates are as follows:
Group Company
2010 2009 2010 2009
% % % %
Deposits with licensed banks 2.62 2.95 2.62 2.95
Short-term deposits with fund management companies 2.64 2.54 2.64 2.54
26 TRADE AND OTHER PAYABLES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Trade payables 53,178 90,433 31,710 81,545
Accrual for fuel 121,725 114,660 121,725 114,660
Aircraft maintenance accruals 254,036 261,448 254,036 261,448
Other payables and accruals 484,004 406,449 476,873 404,194
912,943 872,990 884,344 861,847
The currency exposure profile of trade and other payables is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
RM 343,518 817,010 314,919 805,867
USD 553,608 44,415 553,608 44,415
Others 15,817 11,565 15,817 11,565
912,943 872,990 884,344 861,847
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
195
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
27 AMOUNTS DUE TO SUBSIDIARIES AND A RELATED PARTY
The amounts due to subsidiaries and a related party are denominated in Ringgit Malaysia, unsecured, interest free and have no fixed
terms of repayment.
28 HIRE-PURCHASE PAYABLES
These amounts represent future instalments under hire-purchase agreements, repayable as follows:
Group and Company
2010 2009
RM’000 RM’000
Minimum payments:
– Not later than 1 year 19 66
– Later than 1 year and not later than 5 years – 19
19 85
Less: Future finance charges (4) (13)
Present value of liabilities 15 72
Present value of liabilities:
– Not later than 1 year 15 56
– Later than 1 year and not later than 5 years – 16
15 72
Liabilities under hire-purchase agreements are effectively secured as the rights to the assets revert to the financiers in the event of
default.
As at 31 December 2010, the effective interest rate applicable to the hire-purchase liabilities was 3.75% (2009: 3.46%) per annum for
the Group and Company. The entire balance is denominated in Ringgit Malaysia.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
196
29 BORROWINGS
Group and Company
Weighted
average
rate of finance 2010 2009
2010 2009 RM’000 RM’000
% %
Current:
Term loans 4.09 4.15 493,211 429,575
Revolving credit facilities – 4.10 – 48,000
Finance lease liabilities 5.50 5.48 51,689 53,877
Commodity Murabaha Finance 4.46 3.99 9,067 8,760
553,967 540,212
Non-current:
Term loans 4.09 4.15 5,906,715 5,507,796
Finance lease liabilities 5.50 5.48 876,929 1,031,313
Commodity Murabaha Finance 4.46 3.99 99,240 108,587
Sukuk 4.85 4.85 420,000 420,000
7,302,884 7,067,696
Total borrowings 7,856,851 7,607,908
The Group’s long term borrowings are repayable as follows:
Group and Company
2010 2009
RM’000 RM’000
Not later than 1 year 553,967 540,212
Later than 1 year and not later than 5 years 2,863,736 2,557,423
Later than 5 years 4,439,148 4,510,273
7,856,851 7,607,908
The currency exposure profile of borrowings is as follows:
RM 528,307 585,347
USD 7,204,819 6,972,039
EURO 123,725 50,522
7,856,851 7,607,908
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
197
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
29 BORROWINGS (CONTINUED)
The carrying amounts and fair values of the non-current borrowings are as follows:
Group and Company
2010 2009
Carrying Fair Carrying Fair
amount value amount value
RM’000 RM’000 RM’000 RM’000
Term loans 5,906,715 4,743,235 5,507,796 4,230,803
Finance lease liabilities 876,929 617,939 1,031,313 769,815
Commodity Murabaha Finance 99,240 80,085 108,587 86,889
Sukuk 420,000 382,043 420,000 371,768
7,302,884 5,823,302 7,067,696 5,459,275
The fair values of the current borrowings equal their carrying amounts, as the impact of discounting is not significant. The fair values are
based on cash flows discounted using a rate based on the borrowing rate of 3.8%.
The above term loans, finance lease liabilities (Ijarah) and Commodity Murabaha Finance are for the purchase of aircraft, spare engines
and simulators.
The repayment terms of term loans and finance lease liabilities are on a quarterly or semi-annually basis. These are secured by the
following:
(a) Assignment of rights under contract with Airbus over each aircraft
(b) Assignment of insurance of each aircraft
(c) Assignment of airframe and engine warranties of each aircraft
The Commodity Murabaha Finance is secured by a second priority charge over the aircraft.
The purpose of the Sukuk is to fund the Company’s capital expenditure and working capital. The Sukuk is secured by the following:
(i) An unconditional and irrevocable bank guarantee provided by financial institutions; and
(ii) An assignment over the proceeds of the Ijarah Service Reserve Account opened by the Company pursuant to the exercise.
The Group has the following undrawn borrowing facilities:
2010 2009
RM’000 RM’000
Fixed rate:
– expiring within one year 48,000 –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
198
30 DERIVATIVE FINANCIAL INSTRUMENTS
Group and Company
2010
Assets Liabilities
RM’000 RM’000
Non-current
Interest rate swaps – cash flow hedges – (211,457)
Interest rate swaps – held for trading 23,306 (105,545)
Forward foreign exchange contracts – cash flow hedges 2,238 (132,656)
Forward foreign exchange contracts – held for trading – (3,207)
Total 25,544 (452,865)
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedge item is
more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.
The ineffective portion recognised in the income statement arising from cash flow hedges amounted to a loss of RM6.1 million (Note 7).
2010
Notional
amount Fair value
RM’000 RM’000
equivalent
Interest rate caps 635,877 23,306
Interest rate swaps 2,684,830 (317,000)
Cross currency interest rate swaps 198,491 (11,357)
Forward foreign exchange contracts 3,522,199 (122,270)
The fair values of interest rate caps and interest rate swaps are calculated as the present value of the estimated future cash flows
discounted at prevailing rates. The fair values of forward foreign exchange and fuel option contracts are determined using forward
exchange rates or prices based on the relevant forward price curve on the balance sheet date. In assessing the fair values of the
derivatives and financial instruments, the Group makes assumptions that are based on market conditions existing at each balance
sheet date. These instruments are not recognised in the financial statements on inception. However, any gain or loss arising from each
underlying transaction or settlement of the relevant contracts governing those underlying transactions or settlements are measured and
recognised in the financial statements based on the current market rates at that date.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
199
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
30 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
(i) Forward foreign exchange contracts
The notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2010 were RM3.721
million.
As at 31 December 2010, the Group has hedged approximately 41% of its USD liabilities pertaining to its aircraft, engine and
simulator loans into Malaysian Ringgit (“RM”) by using long dated foreign exchange forward contracts. The calculation includes
loans for aircraft deployed to Thai AirAsia and Indonesia AirAsia where the Company receives lease payments in USD. However, if
the calculation is based on loans pertaining to aircraft being deployed to Malaysia, approximately 60% of the loans are hedged from
USD into RM. The latest weighted average foreign forward exchange rate is at 3.2528 USD:RM. Gains and losses recognised in the
hedging reserve in equity on forward foreign exchange contracts as of 31 December 2010 are recognised in the income statement
in the period or periods during which the hedged forecast transaction affects the income statement.
(ii) Interest rate hedging
The notional principal amounts of the outstanding interest rate contracts at 31 December 2010 were RM3.321 billion.
The Group has entered into interest rate hedging transactions to hedge against fluctuations in the USD LIBOR on its existing aircraft
financing for aircraft delivered from 2005 to 2010. As at 31 December 2010, the Group has hedged all its existing floating aircraft
loans at strike rates between 3.25% per annum and 5.20% per annum via interest rate swaps, interest rate caps and cross-currency
swaps. Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31 December 2010 will
be continuously released to the income statement within finance cost until the full repayment of the bank borrowings (Note 29).
(iii) Fuel hedging
As at 31 December 2010, the Group has no outstanding fuel hedging transactions.
31 SHARE CAPITAL
Group and Company
2010 2009
RM’000 RM’000
Authorised:
Ordinary shares of RM0.10 each:
At beginning and end of the financial year 500,000 500,000
Issued and fully paid up:
Ordinary shares of RM0.10 each:
At beginning of the financial year 275,774 237,421
Issued during the financial year 1,570 38,353
At end of the financial year 277,344 275,774
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM275,774,458 to RM277,343,608
by way of issuance of 15,691,500 ordinary shares of RM0.10 each pursuant to the exercise of the Employee Share Option Scheme
(“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM15,377,670, has been
credited to the Share Premium account.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the
Company. There were no other changes in the issued and paid-up capital of the Company during the financial year.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
200
31 SHARE CAPITAL (CONTINUED)
During the previous financial year, the Company increased its issued and paid-up ordinary share capital from RM237,420,958 to
RM275,774,458 by way of issuance of 380,000,000 ordinary shares of RM0.10 each pursuant to the sale of shares at RM1.33 per
share by way of book-building and the issuance of 3,535,000 ordinary shares of RM0.10 each pursuant to the exercise of the ESOS
at an exercise price of RM1.08 per share. The premium arising from the book-building and exercise of ESOS of RM467,400,000 and
RM3,464,300 respectively had been credited to the Share Premium account.
The new ordinary shares issued during the previous financial year ranked pari passu in all respects with the existing ordinary shares of
the Company. There were no other changes in the issued and paid-up capital of the Company during previous the financial year.
EMPLOYEE SHARE OPTION SCHEME (“ESOS”)
The Company implemented an ESOS on 1 September 2004 (“the Scheme”). The ESOS is governed by the by-laws which were approved
by the shareholders on 7 June 2004 and is effective for a period of 5 years from the date of approval.
The main features of the ESOS are as follows:
(a) The maximum number of ordinary shares, which may be allotted pursuant to the exercise of options under the Scheme, shall not
exceed ten per cent (10.0%) of the issued and paid-up share capital of the Company at any point in time during the duration of the
Scheme.
(b) The Option Committee may from time to time decide the conditions of eligibility to be fulfilled by an Eligible Person in order to
participate in the Scheme.
(c) The aggregate number of shares to be offered to any Eligible Person who has fulfilled the eligibility criteria for the time being by way
of options in accordance with the Scheme shall be at the discretion of the Option Committee. The Option Committee may consider
circumstances such as the Eligible Person’s scope of responsibilities, performance in the Group, rank or job grade, the number of
years of service that the Eligible Person has rendered to the Group, the Group’s retention policy and whether the Eligible Person
is serving under an employment contract for a fixed duration or otherwise. The Option Committee’s decision shall be final and
binding.
(d) The maximum number of shares allocated to Executive Directors, Non-Executive Directors and senior management by way of
options shall in aggregate not exceed fifty per cent (50.0%) of the total number of shares (or such other percentage as may be
permitted by the relevant regulatory authorities from time to time) available under the Scheme.
(e) The subscription price, in respect of options granted prior to the date of listing in Bursa Malaysia, shall be RM1.08 per share.
(f) The options granted are exercisable one year beginning from the date of grant.
The shares to be allotted and issued upon any valid exercise of options will, upon such allotment and issuance, rank pari passu
in all respects with the existing and issued shares except that such shares so issued will not be entitled to any dividends, rights,
allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of
such shares. The options shall not carry any right to vote at a general meeting of the Company.
The Company granted 93,240,000 options at an exercise price of RM1.08 per share under the ESOS scheme on 1 September 2004,
which expired on 6 June 2009. During the previous financial year ended 31 December 2009, the validity of this ESOS scheme was
extended to 6 June 2014.
At 31 December 2010, options to subscribe for 10,437,400 (2009: 26,460,900) ordinary shares of RM0.10 each at the exercise price
of RM1.08 per share remain unexercised. These options granted do not confer any right to participate in any share issue of any other
company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
201
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
31 SHARE CAPITAL (CONTINUED)
EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONTINUED)
Set out below are details of options over the ordinary shares of the Company granted under the ESOS:
Exercise
Expiry price At At
Grant date date RM/share 1.1.2010 Granted Exercised Lapsed 31.12.2010
‘000 ‘000 ‘000 ‘000 ‘000
1 Sep 2004 6 June 2014 1.08 26,461 – 15,692 332 10,437
2010 2009
‘000 ‘000
Number of share options vested at balance sheet date 10,437 26,461
Details relating to options exercised during the financial year are as follows:
Quoted price
of shares Number
at share Exercise of shares
Exercise date issue date price issued
RM/share RM/share ‘000
January 2010 to March 2010 1.27–1.46 1.08 1,084
April 2010 to June 2010 1.11–1.43 1.08 604
July 2010 to September 2010 1.25–2.25 1.08 5,963
October 2010 to December 2010 2.12–2.74 1.08 8,041
15,692
2010 2009
RM’000 RM’000
Ordinary share capital at par 1,570 353
Share premium 15,378 3,464
Proceeds received on exercise of share options 16,948 3,817
Fair value at exercise date of shares issued 32,182 4,580
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
202
32 RETAINED EARNINGS
Under the single-tier tax system introduced by the Finance Act, 2007 which came into effect from the year of assessment 2008,
companies are not required to have tax credits under Section 108 of the Income Tax Act 1967 for dividend payment purposes. Dividends
paid under this system are tax exempt in the hands of shareholders.
Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 credits are
exhausted or 31 December 2013, whichever is earlier, unless they opt to disregard the Section 108 credits to pay single-tier dividends
under the special transitional provisions of the Finance Act, 2007.
As at 31 December 2010, the Company has sufficient Section 108 tax credits to pay approximately RM19.0 million (2009: RM19.0
million) of its retained earnings as franked dividends. The extent of the retained earnings not covered at that date amounted to RM2.08
billion (2009: RM1.13 billion).
In addition, the Company has tax exempt income as at 31 December 2010 amounting to approximately RM0.5 million (2009: RM0.5
million) available for distribution as tax exempt dividends to shareholders.
33 DIVIDEND
A first and final dividend in respect of the financial year ended 31 December 2010 of 3 sen (2009: Nil) per share, amounting to a
total dividend of RM76,860,918, is to be proposed at the forthcoming Annual General Meeting of the Company and will be paid to
shareholders registered in the Register of Members at the close of business on 20 June 2011, as follows:
2010 2009
Gross Amount Gross Amount
dividend of dividend dividend of dividend
per share net of tax per share net of tax
Sen RM’000 Sen RM’000
First and final dividend for the financial year
ended 31 December 2010:
Gross dividend of 0.91 sen less 25% tax 0.91 19,026 – –
Tax exempt dividend 0.02 528 – –
Single-tiered dividend 2.07 57,307 – –
3.0 76,861 – –
The financial statements do not reflect this dividend which will be accrued as a liability upon the approval by shareholders.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
203
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
34 COMMITMENTS
(a) Capital commitments not provided for in the financial statements are as follows:
Group and Company
2010 2009
RM’000 RM’000
Property, plant and equipment:
Approved and contracted for 12,829,657 16,234,759
Approved but not contracted for 7,931,251 8,492,282
20,760,908 24,727,041
Property, plant and equipment:
Share of a jointly controlled entity’s capital commitments 17,100 10,805
Share of an associate’s capital commitments 8,626 8,505
The capital commitments for the Group and Company are in respect of aircraft purchase and options to purchase aircraft.
(b) Non-cancellable operating leases
The future minimum lease payments and sublease receipts under non-cancellable operating leases are as follows:
Group and Company
2010 2009
Future Future Future Future
minimum minimum minimum minimum
lease sublease lease sublease
payments receipts payments receipts
RM’000 RM’000 RM’000 RM’000
Not later than 1 year 49,469 422,224 100,389 350,835
Later than 1 year and not later than 5 years 172,266 768,539 203,491 640,280
Later than 5 years 194,136 – 260,486 –
415,871 1,190,763 564,366 991,115
Sublease receipts include lease receipts from both owned and leased aircraft.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
204
35 CONTINGENT LIABILITIES
Thai AirAsia Co. Ltd (“TAA”), a jointly controlled entity of the Group, has contingent liabilities relating to guarantees issued by banks in
respect of the Company’s pilot trainees’ loans in accordance with the pilot professional course amounting to RM Nil million (31.12.2009:
RM5.0 million) which will be terminated when the student pilot earns a commercial pilot license and is assigned as co-pilot, or whenever
the pilot trainee can completely settle all outstanding debts with the bank. However, TAA can fully reclaim the said liabilities from the
pilot trainees’ guarantors as the guarantees have been pledged with TAA.
36 SEGMENTAL INFORMATION
Segmental information is as shown in the income statements, balance sheets and relevant notes as the Group’s sole business segment
is the provision of air transportation services.
The Group’s operations are conducted predominantly in Malaysia.
37 SIGNIFICANT RELATED PARTY TRANSACTIONS
The related party transactions of the Company comprise mainly transactions between the Company and its subsidiaries, jointly controlled
entity and associates. Details of these related companies are shown in Notes 13, 14 and 15 to the financial statements.
All related party transactions were carried out on agreed terms and conditions.
Key management personnel are categorised as head or senior management officers of key operating divisions within the Group and
Company. The key management compensation is disclosed in Note 37(e) below.
Related party transactions also include transactions with entities that are controlled, jointly controlled or significantly influenced directly
or indirectly by any key management personnel or their close family members, where applicable.
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
(a) Income:
Aircraft operating lease income for owned and
leased aircraft
– Thai AirAsia Co. Ltd 223,553 175,035 223,553 175,035
– PT Indonesia AirAsia 172,390 145,297 172,390 145,297
Services charged to AirAsia X Sdn Bhd, a company
with common Directors and shareholders 85,845 57,028 85,845 57,028
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
205
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
37 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
(b) Recharges:
Maintenance and overhaul charges
– Thai AirAsia Co. Ltd 24,363 27,809 24,363 27,809
– PT Indonesia AirAsia 12,164 26,895 12,164 26,895
Loss on unwinding of derivatives
– Thai AirAsia Co. Ltd – 43,414 – 43,414
– PT Indonesia AirAsia – 46,330 – 46,330
(c) Receivables:
– AirAsia (Mauritius) Limited – – 422,415 194,503
– AirAsia International Limited – – 7,208 3,123
– Thai AirAsia Co. Ltd 99,802 366,388 – 171,885
– PT Indonesia AirAsia 268,058 445,776 268,058 445,776
– Crunchtime Culinary Services Sdn Bhd – – 2,757 –
– AirAsia Philippines Inc 12,292 11,191 12,292 11,191
– AirAsia X Sdn Bhd – 3,303 – 3,303
(d) Payables:
– AirAsia Go Holiday Sdn Bhd – – 44,251 27,922
– Thai AirAsia Co. Ltd – – 322,614 –
– Crunchtime Culinary Services Sdn Bhd – – – 1,133
– AirAsia Pte Limited – 3,382 5,223 3,382
– AirAsia X Sdn Bhd 41,262 – 41,262 –
(e) Key management compensation
– basic salaries, bonus and allowances 24,774 13,617 24,774 13,617
– defined contribution plan 2,730 1,455 2,730 1,455
27,504 15,072 27,504 15,072
Included in the key management compensation are Executive Directors’ remuneration as disclosed in Note 5.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
206
38 FINANCIAL RISK MANAGEMENT POLICIES
The Group’s financial risk management policy seeks to ensure that the financial resources that are available for the development of the
Group’s businesses are constantly monitored and managed vis-a-vis its ongoing exposure to fuel price, interest rate, foreign currency,
credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved and reviewed periodically by the
Board to minimise the effects of such volatility on its financial performance.
The policies in respect of the major areas of treasury activities are as follows:
(a) Market risk
(i) Fuel price risk
The Group is exposed to jet fuel price risk arising from the fluctuations in the prices of jet fuel. It seeks to hedge its fuel
requirements and implements various fuel management strategies in order to address the risk of rising fuel prices.
(ii) Interest rate risk
In view of the substantial borrowings taken to finance the acquisition of aircraft, the Group’s income and operating cash
flows are also influenced by changes in market interest rates. Interest rate exposure arises from the Group’s borrowings and
deposits and is managed by maintaining a prudent mix of fixed and floating rate debt and derivative financial instruments.
Derivative financial instruments are used, as far as possible and where appropriate, to generate the desired fixed interest rate
profile. Surplus funds are placed with reputable financial institutions at the most favourable interest rates.
The Group had previously entered into a number of immediate and forward starting interest rate swap contracts and cross
currency swap contracts that effectively converted its existing and future long-term floating rate debt facilities into fixed rate
debts. However, loans of approximately 3% of total long term debts are not currently covered by such swaps and have therefore
remained at floating rates that are linked to the London Inter Bank Offer Rate (“LIBOR”).
During the financial year, the Company has terminated a number of its interest rate swap contracts in view of the sharp decline
in both short-term and long-term interest rates.
At the same time, the Group has re-entered into new hedges via interest rate swaps and interest rate caps at lower rates.
Some of the interest rate swaps have been embedded into the relevant aircraft loans to provide fixed rate facilities.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
207
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
At 31 December 2010, if interest rate on USD denominated borrowings had been 60 basis points higher/lower with all other
variables held constant, the impact on the post-tax profit for the year and equity, as a result of an increase/decrease in the
fair value of the interest rate derivative financial instruments under cash flow hedges are tabulated below:
+60 basis points -60 basis points
RM’000 RM’000
Impact on post tax profits 12,559 (48,396)
Impact on equity 58,222 (65,511)
The remaining terms of the outstanding interest rate derivative contracts of the Company at 31 December 2010, which are
denominated in USD, are as follows:
2010 2009
RM’000 RM’000
equivalent equivalent
Later than 5 years:
Interest rate caps 635,877 768,188
Interest rate swaps 2,684,830 3,409,159
Cross currency interest rate swaps 198,491 213,413
3,519,198 4,390,760
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
208
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(ii) Interest rate risk (continued)
The net exposure of financial assets and liabilities of the Group and Company to interest rate cash flow risk and the periods in
which the borrowings mature are as follows:
Functional Effective
currency/ interest Total Floating Fixed interest rate
Financial currency at balance carrying interest 1 year > 1-2 > 2-3 > 3-4 > 4-5 More than
Instruments exposure sheet date amount rate or less years years years years 5 years
% per annum RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group and Company
31 December 2010
Deposits with
licensed bank RM/RM 2.62 719,439 – 719,439 – – – – –
Deposits with
fund management
companies RM/RM 2.64 103,319 – 103,319 – – – – –
Term loans RM/USD 4.09 (6,399,926) (178,157) (510,419) (528,744) (542,680) (562,542) (578,713) (3,498,671)
Finance lease RM/USD 5.50 (928,618) – (51,689) (54,958) (58,673) (62,515) (66,608) (634,175)
Commodity
Murabaha
Finance RM/USD 4.46 (108,307) – (9,067) (9,566) (10,094) (10,650) (11,237) (57,693)
Sukuk RM/RM 4.85 (420,000) – – – (420,000) – – –
Hire-purchase
payables RM/RM 3.75 (15) – (15) – – – – –
(7,034,108) (178,157) 251,568 (593,268) (1,031,447) (635,707) (656,558) (4,190,539)
31 December 2009
Deposits with
licensed bank RM/RM 2.95 391,478 – 391,478 – – – – –
Deposits with
fund management
companies RM/RM 2.54 100,627 – 100,627 – – – – –
Term loans RM/USD 4.15 (5,937,371) (105,393) (422,690) (432,527) (447,997) (458,119) (474,759) (3,595,886)
Finance lease RM/USD 5.48 (1,085,190) – (53,877) (57,405) (61,036) (65,161) (69,428) (778,283)
Commodity
Murabaha
Finance RM/USD 3.99 (117,347) – (8,760) (9,067) (9,566) (10,094) (10,650) (69,210)
Sukuk RM/RM 4.85 (420,000) – – – – (420,000) – –
Revolving credit RM/USD 4.10 (48,000) – (48,000) – – – – –
Hire-purchase
payables RM/RM 3.46 (72) – (56) (16) – – – –
(7,115,875) (105,393) (41,278) (499,015) (518,599) (953,374) (554,837) (4,443,379)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
209
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(a) Market risk (continued)
(iii) Foreign currency risk
The Group has subsidiaries and associates operating in foreign countries which generate revenue and incur costs denominated
in foreign currencies. The main currency exposures of the Group and Company are primarily in USD, Thai Baht and Indonesian
Rupiah. The Group has a natural hedge to the extent that payments for foreign currency payables are matched against
receivables denominated in the same foreign currency or whenever possible by intragroup arrangements and settlements.
The Company enters into forward foreign currency exchange contracts to limit its exposure on foreign currency receivables and
payables.
At 31 December 2010, if the currency had weakened/strengthened by 5% against the USD with all other variables held
constant, post-tax profit for the financial year would have been MYR201.4 million lower/higher, mainly as a result of foreign
exchange losses/gains on translation of USD denominated receivables and borrowings (term loan & finance lease). Similarly,
the impact on equity would have been RM3.7 million higher/lower due to the cash flow hedging in USD. The exposure to EUR
currency risk of the Group is not material and hence, sensitivity analysis is not presented.
(b) Credit risk
The Group’s exposure to credit risks or the risk of counterparties defaulting arises mainly from various deposits and bank balances,
receivables and derivative financial instruments. The maximum exposure to credit risks is represented by the total carrying amount
of these financial assets in the balance sheet.
Credit risks are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised by
monitoring receivables regularly. In addition, credit risks are also controlled as majority of the Group’s deposits and bank balances
and derivative financial instruments are placed or transacted with major financial institutions and reputable parties. The Directors
are of the view that the possibility of non-performance by the majority of these financial institutions is remote on the basis of their
financial strength and support of their respective governments.
The Group generally has no concentration of credit risk arising from trade receivables.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
210
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(c) Liquidity and cash flow risks
The Group’s policy on liquidity risk management is to maintain sufficient cash and to have available funding through adequate
amounts of committed credit facilities and credit lines for working capital requirements.
The table below analyses the Group’s non-derivative financial liabilities, gross-settled and net-settled derivative financial liabilities
into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table below are the contractual undiscounted cash flows.
At 31 December 2010
Under 1 year 1 – 2 years 2 – 5 years Over 5 years
RM’000 RM’000 RM’000 RM’000
Term loans 702,425 712,286 2,954,474 3,659,957
Finance lease liabilities 68,265 72,118 1,028,971 196,720
Commodity Murabaha finance 14,761 14,774 44,266 65,323
Sukuk 20,370 20,370 430,185 –
Trade and other payables 689,784 – – –
Derivative financial instruments
Net-settled derivatives
Trading 37,578 31,908 38,525 (891)
Hedging 72,865 64,260 75,806 2,892
Gross-settled derivatives
Trading – outflow 10,149 9,649 17,780 –
Trading – inflow (9,567) (9,095) (16,670) –
Hedging – outflow 366,035 362,625 1,080,724 1,793,982
Hedging – inflow (341,797) (339,837) (1,023,389) (1,700,988)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
211
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain
an optimal capital structure so as to provide returns for shareholders and benefits for other stakeholders.
In order to optimise the capital structure, or the capital allocation amongst the Group’s various businesses, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, take on new debts or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital utilisation on the basis of the gearing ratio. This ratio is calculated as
total debts divided by total capital. Total debts are calculated as total borrowings (including “short term and long term borrowings” as
shown in the balance sheets). Total capital is calculated as the sum of ‘equity attributable to equity holders of the Company’ as shown
in the balance sheet and total debts.
The gearing ratio as at 31 December 2010 is as follows:
Group
2010
RM’000
Total borrowings 7,856,851
Total equity attributable to equity holders of the Company 3,640,960
Total capital 11,497,811
Gearing ratio 68.3%
39 FINANCIAL INSTRUMENTS
(a) Financial instruments by category
31 December 2010
Assets at
fair value
through Derivatives
Loans and the profit used for Available
receivables and loss hedging for sale Total
RM’000 RM’000 RM’000 RM’000 RM’000
Assets as per balance sheet
Available for sale financial assets – – – 152,942 152,942
Trade and other receivables
excluding prepayments 606,456 – – – 606,456
Derivative financial instruments – 23,306 2,238 – 25,544
Cash and cash equivalents 1,504,617 – – – 1,504,617
Total 2,111,073 23,306 2,238 152,942 2,289,559
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
212
39 FINANCIAL INSTRUMENTS (CONTINUED)
(a) Financial instruments by category (continued)
31 December 2010
Liabilities Other
at fair financial
value liabilities
through Derivatives at
the profit used for amortised
and loss hedging cost Total
RM’000 RM’000 RM’000 RM’000
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities) – – 6,928,233 6,928,233
Finance lease liabilities 928,618 928,618
Derivative financial instruments 108,752 344,113 – 452,865
Trade and other payables excluding statutory liabilities – – 959,428 959,428
Hire purchase payables – – 15 15
Total 108,752 344,113 8,816,294 9,269,159
1 Prepayments are excluded from the trade and other receivables balance, as this analysis is required only for financial
instruments.
2 Statutory liabilities are excluded from the trade payables balance, as this analysis is required only for financial instruments.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
213
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
39 FINANCIAL INSTRUMENTS (CONTINUED)
(b) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings
(if available) or to historical information about counterparty default rates:
2010
RM’000
Counterparties without external credit rating
Group 1 15,774
Group 2 102,909
Total unimpaired trade receivables and others receivables 118,683
Cash at bank and short-term bank deposits
AA2 to A- 1,398,674
BBB to B1 105,943
1,504,617
Derivative financial assets
AA+ 23,306
A 2,238
25,544
Loans to related parties
Group 2 380,152
Group 1 – New customers/related parties (Less than 6 months)
Group 2 – Existing customers/related parties (more than 6 months) with no defaults in the past.
Group 3 – Existing customers/related parties (more than 6 months) with some defaults in the past.
All defaults were fully recovered.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
214
40 CHANGES IN ACCOUNTING POLICIES
(i) The effects of the changes in accounting policies to each of the line items in the Group’s and Company’s balance sheets are as
follows:
Balances as at 1 January 2010
As previously
stated FRS 139 As restated
RM’000 RM’000 RM’000
Group
Other investments 26,667 (26,667) –
Available-for-sale financial assets – 132,663 132,663
Derivative financial instruments – (130,645) (130,645)
Amount due from a jointly controlled entity 366,388 (15,462) 350,926
Amounts due from associates 456,967 (16,841) 440,126
Retained earnings (1,138,438) 97,278 (1,041,160)
Cash flow hedge reserve – 65,670 65,670
Available-for-sale reserve – (105,996) (105,996)
Company
Other investments 26,667 (26,667) –
Available-for-sale financial assets – 132,663 132,663
Derivative financial instruments – (130,645) (130,645)
Retained earnings (1,138,438) 97,278 (1,041,160)
Cash flow hedge reserve – 65,670 65,670
Available-for-sale reserve – (105,996) (105,996)
(ii) Impact on the Group’s and the Company’s statements of comprehensive income:
Increase/(decrease) for the
financial year ended
31 December 2010
FRS 139 Total
RM’000 RM’000
Other comprehensive income:
Available-for-sale financial assets 4,279 4,279
Cash flow hedges (5,639) (5,639)
Foreign currency translation differences (107) (107)
The adoption of FRS 139 has no significant effect on the results of the Company for the financial year ended 31 December 2010.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
215
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
41 SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES LISTING REQUIREMENT
The following analysis of realised and unrealised retained profits at the legal entity level is prepared in accordance with the Guidance
on Special Matter No. 1 – Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. This disclosure is based on the
format prescribed by Bursa Malaysia Securities Berhad.
Group Company
As at As at
31.12.2010 31.12.2010
RM’000 RM’000
Total retained earnings of AirAsia Berhad and its subsidiaries:
– Realised 997,581 981,345
– Unrealised 1,121,156 1,121,156
2,118,737 2,102,501
Total share of accumulated losses from associated companies:
– Realised (4,112) –
– Unrealised – –
Total share of accumulated losses from jointly controlled entities
– Realised (12,054) –
– Unrealised – –
Total retained earnings as per consolidated financial statements 2,102,571 2,102,501
The disclosure of realised and unrealised profits above is solely for compliance with the directive issued by the Bursa Malaysia Securities
Berhad and should not be applied for any other purposes.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
216
STATEMENT BY
DIRECTORS
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
STATUTORY
DECLARATION
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
We, Dato’ Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin bin Meranun, being two of the Directors of AirAsia Berhad, state that, in
the opinion of the Directors, the financial statements set out on pages 140 to 216 are drawn up so as to give a true and fair view of the
state of affairs of the Group and Company as at 31 December 2010 and of the results and the cash flows of the Group and Company for the
financial year ended on that date in accordance with the provisions of the Companies Act, 1965 and the Financial Reporting Standards, the
MASB approved accounting standards in Malaysia for Entities Other than Private Entities.
In accordance with a resolution of the Board of Directors dated 28 April 2011.
DATO’ SRI DR. ANTHONY FRANCIS FERNANDES DATO’ KAMARUDIN BIN MERANUN
DIRECTOR DIRECTOR
I, Rozman bin Omar, the Officer primarily responsible for the financial management of AirAsia Berhad, do solemnly and sincerely declare that
the financial statements set out on pages 140 to 216 are, in my opinion, correct and I make this solemn declaration conscientiously believing
the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Rozman bin Omar
Subscribed and solemnly declared by the abovenamed Rozman bin Omar at Petaling Jaya in Malaysia on 28 April 2011 before me.
COMMISSIONER FOR OATHS
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
217
INDEPENDENT
AUDITORS’ REPORT
TO THE MEMBERS OF AIRASIA BERHAD (Incorporated in Malaysia) (Company No. 284669-W)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of AirAsia Berhad on pages 140 to 215, which comprise the balance sheets as at 31 December
2010 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash flows of the Group
and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set
out on Notes 1 to 40.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with
MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965, and for such internal
control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with MASB approved accounting standards in Malaysia
for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group
and of the Company as of 31 December 2010 and of their financial performance and cash flows for the financial year then ended.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of
which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 13 to the financial statements.
c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes.
d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
218
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 41 on page 216 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and
is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysia Institute of Accountants (“MIA Guidance”) and the directive of
Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the
MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS SRIDHARAN NAIR
(No. AF: 1146) (No. 2656/05/12 (J))
Chartered Accountants Chartered Accountant
Kuala Lumpur
28 April 2011
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
219
ANALYSIS OF
SHAREHOLDINGS
AS AT 21 APRIL 2011
DISTRIBUTION OF SHAREHOLDERS
Class of shares: Ordinary shares of RM0.10 each (“Shares”)
Voting rights: One vote per ordinary shares
Shareholdings
No. of
Shareholders
% of
Shareholders
No. of
Shares
% of
Issued Share
Capital
Less than 100 87 0.48 1,749 0.00
100 – 1,000 5,615 30.92 5,032,755 0.18
1,001 – 10,000 10,112 55.68 41,522,944 1.50
10,001 – 100,000 1,720 9.47 51,047,740 1.84
100,001 to less than 5% of issued shares 624 3.43 1,882,438,015 67.82
5% and above of issued shares 3 0.02 795,480,877 28.66
18,161 100.00 2,775,524,080 100.00
SUBSTANTIAL SHAREHOLDERS
The direct and indirect shareholdings of the shareholders holding more than 5% in AirAsia Berhad based on the Register of Substantial
Shareholders are as follows:-
Name
DIRECT INDIRECT
No. of
Shares Held
% of
Issued Shares
No. of
Shares Held
% of
Issued Shares
Tune Air Sdn. Bhd. 729,458,382
(1)
26.28 – –
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010
(2)
0.09 729,458,382
(3)
26.28
Dato’ Kamarudin bin Meranun 1,692,900 0.06 729,458,382
(3)
26.28
Employees Provident Fund Board 219,758,900
(4)
7.92 30,392,500 1.09
Genesis Smaller Companies 150,635,581
(5)
5.43 – –
Wellington Management Company, LLP 153,265,415
(6)
5.52 – –
NOTES:
(1)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd., ECML Nominees (Tempatan) Sdn. Bhd., HSBC Nominees (Tempatan) Sdn.
Bhd., and Mayban Nominees (Tempatan) Sdn. Bhd.
(2)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd.
(3)
Deemed interested by virtue of Section 6A of the Companies Act, 1965 (“the Act”) through a shareholding of more than 15% in Tune
Air Sdn. Bhd.
(4)
Shares held under own name (1,500,000 shares) and Citigroup Nominees (Tempatan) Sdn. Bhd. (218,258,900 shares)
(5)
Shares held under HSBC Nominees (Asing) Sdn. Bhd.
(6)
Shares held under Cartaban Nominees (Asing) Sdn. Bhd., Citigroup Nominees (Asing) Sdn. Bhd., Goldman Sachs International, HSBC
Nominees (Asing) Sdn. Bhd., JP Morgan Chase Bank N.A., Master Trust Bank of Japan Ltd., Mellon Bank N.A., and RBC Dexia Investor
Services.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
220
DIRECTORS’ SHAREHOLDINGS
The interests of the Directors of AirAsia in the Shares and options over shares in the Company and its related corporations based on the
Company’s Register of Directors’ Shareholdings are as follows:-
Name
No. of
Shares Held
% of
Issued Shares
No. of
Shares Held
% of
Issued Shares
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010
(1)
0.09 729,458,382
(2)
26.28
Dato’ Kamarudin bin Meranun 1,692,900 0.06 729,458,382
(2)
26.28
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar – – – –
Conor Mc Carthy 14,125,903
(3)
0.51 – –
Dato’ Leong Sonny @ Leong Khee Seong 100,000 -* – –
Dato’ Fam Lee Ee 100,000 -* – –
Datuk Alias bin Ali – – – –
Dato’ Mohamed Khadar bin Merican – – – –
Mohd Omar bin Mustapha – – – –
NOTES:
* Negligible.
(1)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd.
(2)
Deemed interested by virtue of Section 6A of the Act, through a shareholding of more than 15% in TASB
(3)
Shares held under own name (100,000 shares) and HSBC Nominees (Asing) Sdn. Bhd. Exempt AN for Credit Suisse (SG BR-TST-Asing)
(14,025,903 shares)
The interests of Directors in options over unissued ordinary shares of RM0.10 each of the Company:
Shareholdings
Price
per option share
No. of
Option Shares
Dato’ Sri Dr. Anthony Francis Fernandes RM1.08 600,000
Dato’ Kamarudin bin Meranun RM1.08 600,000
# The options held over ordinary shares in the Company were granted on 1 September 2004 pursuant to the Company’s Employee Share
Option Scheme (“ESOS”) approved by the shareholders on 7 June 2004. On 28 May 2009, the Company extended the duration of its
ESOS which expired on 6 June 2009 for 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws. The ESOS
extension was not subject to any regulatory or shareholders approval.
None of the Directors have any interests in the shares or options of the subsidiaries of the Company other than as disclosed above.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
221
LIST OF TOP 30
SHAREHOLDERS
AS AT 21 APRIL 2011
No Name Of Shareholders No. Of Shares Held
% Of Issued
Share Capital
1. Tune Air Sdn. Bhd. 420,786,396 15.16
2. Citigroup Nominees (Tempatan) Sdn. Bhd.
Employees Provident Fund Board
224,058,900 8.07
3. HSBC Nominees (Asing) Sdn. Bhd.
BBH (LUX) SCA for Genesis Smaller Companies
150,635,581 5.43
4. Cartaban Nominees (Asing) Sdn. Bhd.
SSBT Fund HG05 for the New Economy Fund
135,334,000 4.88
5. HSBC Nominees (Asing) Sdn. Bhd.
TNTC for The Nomad Investment Partnership LP Cayman
115,000,000 4.14
6. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for JPMorgan Chase Bank, National Association (U.S.A.)
74,232,150 2.67
7. Mayban Nominees (Tempatan) Sdn. Bhd.
Kuwait Finance House (Malaysia) Berhad for Tune Air Sdn. Bhd. (Tony Fernandes)
71,000,000 2.56
8. Cartaban Nominees (Asing) Sdn. Bhd.
SSBT Fund HG22 for Smallcap World Fund, Inc.
64,000,000 2.31
9. HSBC Nominees (Asing) Sdn. Bhd.
NTGS LDN for Skagen Kon-Tiki Verdipapirfond
62,078,300 2.24
10. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
58,000,000 2.09
11. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
48,335,367 1.74
12. HSBC Nominees (Tempatan) Sdn. Bhd.
Credit Suisse HK for Tune Air Sdn. Bhd.
40,000,000 1.44
13. Cartaban Nominees (Asing) Sdn. Bhd.
Exempt an for State Street Bank & Trust Company (West CLT OD67)
39,255,800 1.41
14. HSBC Nominees (Tempatan) Sdn. Bhd.
Six Sis for Tune Air Sdn. Bhd.
35,000,000 1.26
15. Valuecap Sdn. Bhd. 26,597,900 0.96
16. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for Morgan Stanley & Co. Incorporated (Client)
25,996,100 0.94
17. Mayban Nominees (Tempatan) Sdn. Bhd.
Mayban Trustees Berhad for Public Ittikal Fund (N14011970240)
24,429,800 0.88
18. Citigroup Nominees (Asing) Sdn. Bhd.
CBLDN for Kuwait Investment Authority
23,459,500 0.85
19. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
22,586,619 0.81
20. Mayban Nominees (Tempatan) Sdn. Bhd.
Mayban Trustees Berhad for Public Regular Savings Fund (N14011940100)
22,487,700 0.81
21. HSBC Nominees (Asing) Sdn. Bhd.
BBH And Co Boston for Vanguard Emerging Markets Stock Index Fund
21,550,848 0.78
22. CIMSEC Nominees (Tempatan) Sdn. Bhd.
CIMB Bank for Tune Air Sdn. Bhd. (SFD)
20,000,000 0.72
23. Amanahraya Trustees Berhad
Public Islamic Optimal Growth Fund
17,302,800 0.62
24. Amanahraya Trustees Berhad
Public Islamic Sector Select Fund
17,048,500 0.61
25. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for The Bank of New York Mellon (Mellon Acct)
16,309,723 0.59
26. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for JPMorgan Chase Bank, National Association (U.K.)
15,153,390 0.55
27. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for Credit Suisse (SG BR-TST-Asing)
14,990,603 0.54
28. AMSEC Nominees (Tempatan) Sdn. Bhd.
AmTrustee Berhad for CIMB Islamic Dali Equity Growth Fund (UT-CIMB-Dali)
14,715,400 0.53
29. Cartaban Nominees (Asing) Sdn. Bhd.
BBH (LUX) SCA for Fidelity Funds ASEAN
13,832,700 0.50
30. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
13,750,000 0.50
PAGE >
222
AIRASIA BERHAD
ANNUAL REPORT
2010
LIST OF
PROPERTIES HELD
Save as disclosed below, as at 31 December 2010, neither the Company nor any of its subsidiaries owned any land or building:
Owner of
building
Postal address/
location of
building
Description/
existing use of
building
Tenure/
date of expiry
of lease
Build-up area
Approximate
age of building
Audited net
book value
as at 31
December 2010
(RM’000)
AirAsia
Berhad
Taxiway Charlie,
KLIA (part of
PT 39 KLIA,
Sepang)
See note 1
Non permanent
structure/
aircraft
maintenance
hangar
See note 2 2,400 sqm 7 years and 5
months
1,802
AirAsia
Berhad
AirAsia
Academy,
Lot PT 25B,
Southern
Support Zone,
KLIA 64000
Sepang,
Selangor
AirAsia
Simulator
Complex
30 years from
20 September
2004 to 19
September
2034
4,997 sqm 6 years 10,810
AirAsia
Berhad
AirAsia
Academy,
Lot PT 25B,
Southern
Support Zone,
KLIA 64000
Sepang,
Selangor
AirAsia
Academy,
Engineering
and In-Flight
Warehouse
30 years from
1 May 2007 to
30 April 2037
6,225 sqm
- Academy
5,255 sqm -
Engineering/
In-Flight
Warehouse
3 years 24,775
Notes:
(1) On the fitness of occupation of the hangar, it is the subject of a year-to-year “Kelulusan Permit Bangunan Sementara” issued by
the Majlis Daerah Sepang. The permit has been renewed and will expire on 31 December 2011.
(2) The land area occupied is approximately 2,400 square meters. The land is owned by Malaysia Airports (Sepang) Sdn. Bhd.
(“MAB”) and the Company has an automatic renewal of tenancy on a month to month basis.
Revaluation of properties has not been carried out on any of the above properties to date.
PAGE >
223
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP
DIRECTORY
CAMBODIA
PHNOM PENH
Phnom Penh Airport office
17 Mezzanine Floor of Arrival
Domestic Terminal,
Phnom Penh Airport, Phnom Penh
CHINA
MACAU
Office 20, Mezzaninne Level
Passenger Terminal, Macau
International Airport Taipa,
Macau
SHENZHEN
Junting Hotel Shenzhen, XY-10,
Shenzhen Eastern Road,
Shenzhen
INDONESIA
ACEH
Bandara Sultan Iskandar Muda,
Blang Bintang, Aceh
BALI
Bandara I Gusti Ngurah Rai,
Terminal Keberangkatan
International Bali 80361
Jl. Legian Kaja No. 455 Kuta,
Bali
BANDUNG
Ruangan Nombor 34
Bandara Husein Sastranegara
Jalan Pajajaran No 156 Bandung
Jawa Barat
Lobby Grand Serela Hotel
Jl. L.L. R.E Martadinata (Riau)
No. 56 Telp. (022) 426 1636
BATAM
Jl. imam Bonjol,
Gedung Jamsotek/
Graha Nagoya Mas
JAKARTA
Terminal 3 & Terminal 2D
Departure hall Airlines Offices
Soekarno-Hatta International
Airport Cengkareng
Jl. Boulevard Raya, Blok LA 4,
No. 10 Kelapa Gading
Jakarta Utara
Jln. Panglima Polim,
No. 105B Blok M, Jakarta Selatan
MAKASSAR
Depature terminal,
Sultan Hasanuddin
International Airport,
Makasar – South Sulawesi
Indonesia
Mall Panakukang,
Carrefour Panakukang,
3rd Floor, Jl. Adyaksa Baru
No. 1, Makassar – South Sulawesi
Indonesia
MANADO
Sam Ratulangi International Airport
Jalan A.A. Maramis,
Manado 95374
MEDAN
Bandara Polonia Terminal
Keberangkatan Internasional,
Medan 20157 Sumatra
Garuda Plaza Hotel
Jl. Sisigamangaraja
N0.18 Medan - 20213
PADANG
Hotel Hangtuah,
Jl. Pemuda No. 1 Padang Sumatra Barat,
25117
PALEMBANG
Sultan Mahmud Badaruddin II
Airport Palembang, South Sumatra
PEKAN BARU
Sultan Syarif Kasim II International Airport,
Jalan Perhubungan Udara Simpang Tiga,
Pekanbaru
SOLO
Adi Sumarmo International Airport,
Surakarta 57108
SURABAYA
Lobby International Terminal
Juanda International Airport
Jalan Raya Juanda Surabaya
Jawa Timur
YOGYAKARTA
Adisutjipto International Airport
Jln. Solo km.9, Yogyakarta, 55282
Melia Purosani Hotel
Jl Suryotomo No. 31
Yogyakarta
MALAYSIA
JOHOR
Lot No. 162, Festive Street Mall,
Danga Bay, Jalan Skudai,
Johor Bahru
GL 13 Sultan Ismail Airport
81250 Johor Bahru, Johor
KEDAH
LOT 20, Lapangan Terbang Sultan Abdul
Halim, 06200 Kepala Batas, Alor Setar,
Kedah
Langkawi International Airport
07100 Padang Mat Sirat
Langkawi
KUALA LUMPUR
Unit 11, Level 1 Stesen Sentral
Kuala Lumpur, 50470
KELANTAN
Ground Floor,
Lapangan Terbang Sultan Ismail Petra
16100 Pengkalan Chepa
Kota Bharu, Kelantan Darul Naim
TERENGGANU
Lot No. 15 & 17, Terminal Building, Sultan
Mahmud Airport 21300 Kuala Terengganu,
Terengganu
LABUAN
Level 1, Labuan Airport Terminal
87008 Wilayah Persekutuan,
Labuan
PENANG
Lot 3, Departure Concourse,
Penang International Airport
11900 Bayan Lepas, Pulau Pinang
Ground Floor, Kim Mansion 332,
Chulia Street, 10200 Penang
PAGE >
224
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP
DIRECTORY
SABAH
Lot 1& 2, 1st Floor, Terminal Building,
Sandakan Airport, 90719 Sandakan Sabah
FL4, 1st Floor, Tawau Airport Building,
Jalan Apas-Balung, 91100 Tawau,
Sabah
TB228, Lot 5, Ground Floor,
Jalan Bunga, Fajar Complex
91000 Tawau, Sabah
Lot G24, Ground Floor,
Wisma Sabah, Jln. Tun Razak,
88000, Kota Kinabalu, Sabah
T2: Ground Floor, Terminal 2
Kota Kinabalu Int. Airport
Old Airport Road, Tanjung Aru
88100, Kota Kinabalu, Sabah
SARAWAK
Lot GL.14, Public Concourse
Terminal Building, Bintulu Airport
97000 Bintulu Sarawak
1st Floor, Miri Airport,
98000 Bintulu, Sarawak
GF Lot 946, Block 9, Miri
Concession Land District,
98000 Miri, Sarawak
Ground Floor,
Kuching International Airport,
93756 Kuching, Sarawak
Wisma Ho Ho Lim, Ground Floor
No. 291, Sub Lot 4, Jalan Abell
93100 Kuching, Sarawak
1st Floor, Main Terminal Building
Sibu Airport,
96000 Sibu, Sarawak
SELANGOR
Ground Floor, Terminal 3,
Sultan Abdul Aziz Shah Airport
47200 Subang, Selangor
Jalan KLIA S3,
Southern Support Zone,
Kuala Lumpur International Airport,
64000 Sepang, Selangor
MYANMAR
YANGON
Yangon International Airport
Office Unit# 01-L, Parkroyal
Yangon, Myanmar
SINGAPORE
Row No:11, Departure level 2,
Singapore Changi Airport
Terminal 1, Singapore
111 North Bridge Road #01-36/37
Peninsula Plaza 179098, Singapore
THAILAND
BANGKOK
Suvarnabhumi International Airport
Room A1-062 Ground Floor,
Concourse A, Bangna-Trad Road,
Racha Teva, Bang Pli, Samutprakam 10540
127 Tanao Road, Phra Nakorn,
Bangkok 10200
CHIANG MAI SALES OFFICE
Chiang Mai International Airport
60, 1st Floor,
Tambol Sutep, Amphur Muang,
Chiang Mai 50200
416 Thaphae Road,
Chiang Mai
CHIANG RAI
Chiang Rai International Airport
2305/2 404 Moo 10, Tambol Bandu,
Amphur Muang, Chiang Rai 57100
HAT YAI
Hat Yai International Airport
125 Hadyai International Airport,
Moo 3 Klongla, Klonghoikong,
Songkhla 90115
KRABI
133 Moo 5 Petchkasem Road,
Tambol Nuakrong, Amphur
Nuakrong, Krabi 81130
NARATHIWAT
Narathiwat Airport
330 Moo 5, Tambol kok-Kian,
Amphur Muang, Narathiwat 96000
PHUKET
Phuket Internatinal Airport
312, 3rd Floor, Tumbol Maikao,
Amphur Thalang, Phuket 83110
Unit 9, Laflora Patong Area,
No. 39, 39/1, Thaveewong Rd.,
Patong, Kratoo, Phuket
SURAT THANI
Surat Thani International Airport
73 Moo 3 Tambol Huatuey,
Amphur Punpin,
Suratthani 84130
UBON RATCHATHANI
Ubon Ratchathani Airport
224 Moo 1, Tambol Makkhang,
Amphur Muang, Udon Thani 41000
VIETNAM
Hanoi
Noibai International Airport
Lobby A, 3rd Floor,
Hanoi, Vietnam
No. 30 Le Thai To Str.,
Hoan Kiem Dist.,
Hanoi City
HO CHI MINH SALES OFFICE
Van Phong Ban Ve Tp Hcmc
254 De Tham,
P.Pham Ngu Lao,
District 1,
Ho Chi Minh City
PAGE >
225
AIRASIA BERHAD
ANNUAL REPORT
2010
GLOSSARY
AirAsia Berhad “The Company” or “AirAsia”.
Aircraft at end of period
Number of aircraft owned or on lease arrangements of over one month’s duration
at the end of the period.
Aircraft utilisation Average number of block hours per day per aircraft operated.
Available Seat Kilometres (ASK) Total seats flown multiplied by the number of kilometres flown.
Average fare Passenger seat sales, surcharges and fees divided by number of passengers.
Block hours
Hours of service for aircraft, measured from the time that the aircraft leaves the
terminal at the departure airport to the time that it arrives at the terminal at the
destination airport.
Capacity The number of seats flown.
Cost per ASK (CASK) Revenue less operating profit divided by available seat kilometres.
Cost per ASK, excluding fuel
(CASK ex fuel)
Revenue less operating profit and aircraft fuel expenses, divided by available seat
kilometres.
Load factor Number of passengers as a percentage of capacity.
Passengers carried
Number of earned seats flown. Earned seats comprises seats sold to passengers
(including no-shows), seats provided for promotional purposes and seats provided
to staff for business travel.
Revenue per ASK (RASK) Revenue divided by available seat kilometres.
Revenue Passenger Kilometres (RPK) Number of passengers multiplied by the number of kilometres those passengers
have flown.
Stage A one-way revenue flight.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
226
FORM
OF PROXY
I/We ______________________________________________________________________________ NRIC No./Co No.: _______________________
(FULL NAME IN BLOCK LETTERS) (COMPULSORY)
of __________________________________________________________________________________________________________________________
(ADDRESS)
__________________________________________________________________________________________________________________________ being a
(ADDRESS)
member of AIRASIA BERHAD (“the Company”) hereby appoint ____________________________________________________________________
(FULL NAME IN BLOCK LETTERS)
NRIC No.: _____________________________ of ___________________________________________________________________________________
(COMPULSORY) (ADDRESS)
_______________________________________________________________________________________________________________________________
(ADDRESS)
and/or ____________________________________________________________________________ NRIC No.: _____________________________ of
(FULL NAME IN BLOCK LETTERS) (COMPULSORY)
____________________________________________________________________________________________________ as my/our proxy(ies) to
(ADDRESS)
vote in my/our name and on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held on Monday, 20 June 2011
at 10.00 a.m. and at any adjournment of such meeting and to vote as indicated below:
ORDINARY RESOLUTION DESCRIPTION FOR AGAINST
No. 1 Ordinary Business
Receive the Audited Financial Statements and Reports
No. 2 Declaration of First and Final Dividend
No. 3 Approval of Directors’ Fees
No. 4 Re-election of Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
No. 5 Re-election of En. Mohd Omar bin Mustapha
No. 6 Re-appointment of Dato’ Leong Sonny @ Leong Khee Seong
No. 7 Re-appointment of Auditors
No. 8
Special Business
Authority to allot shares pursuant to Section 132D of the Companies Act, 1965
(Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting as he thinks fit)
No. of shares held:
CDS Account No.:
The proportion of my/our holding to be First Proxy :__________%
represented by my/our proxies are as follows: Second Proxy:__________%
Date:
_____________________________________________
Signature of Shareholder/Common Seal
Notes to Form of Proxy
a. Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Article 43(1) of the Company’s Articles of Association, only those
Foreigners (as defined in the Articles) who hold shares up to the current prescribed foreign ownership limit of 45.0% of the total issued and paid-up capital, on a first-in-time
basis based on the Record of Depositors to be used for the forthcoming Annual General Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not entitled to
vote, will similarly not be entitled to vote. Consequently, all such disenfranchised voting rights shall be automatically vested in the Chairman of the forthcoming Annual General
Meeting.
b. A member entitled to attend and vote is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative), to attend and vote in his stead. A proxy need
not be a member of the Company.
c. The Proxy Form in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either under its common seal or under the hand
of an officer or attorney duly authorised.
d. Where a member appoints two proxies, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.
e. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 it may appoint at least one but not more
than two (2) proxies in respect of each securities account it holds to which ordinary shares in the Company are credited.
f. The Proxy Form or other instruments of appointment shall not be treated as valid unless deposited at the Registered Office of the Company at 25-5, Block H, Jalan PJU 1/37,
Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time set for holding the meeting. Faxed copies of the duly
executed form of proxy are not acceptable.
AIRASIA BERHAD
284669-W
(INCORPORATED IN MALAYSIA)
Fold here
Fold here
Company Secretary
AirAsia Berhad (Company No. 284669-W)
25-5, Block H, Jalan PJU 1/37
Dataran Prima
47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Stamp
www. ai r asi a. com
AirAsia Berhad (284669-W)
LCC Terminal, Jalan KLIA S3, Southern Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan, Malaysia
T +603 8660 4333 F +603 8775 1100
E [email protected]
doc_596912727.pdf
When AirAsia started out as a low-cost airline in 2002, we pledged to make air travel affordable for everybody. Today, nine years down our corporate journey.
A
i
r
A
s
i
a
B
e
r
h
a
d
(
2
8
4
6
6
9
-
W
)
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
0
Annual Report 2010
welcome
on board.
AIRASIA BERHAD
ANNUAL REPORT 2010
FACTS AT A GLANCE
>
Group Revenue
RM3.95 bil
>
Pro?t After Tax
RM1.06 bil
>
Total Assets
RM13.24 bil
A PROMISE MADE,
A PLEDGE KEPT
WHEN AIRASIA STARTED OUT AS A LOW-COST AIRLINE IN 2002, WE PLEDGED TO
MAKE AIR TRAVEL AFFORDABLE FOR EVERYBODY. TODAY, NINE YEARS DOWN
OUR CORPORATE JOURNEY, WE KNOW WE HAVE KEPT TO OUR INITIAL PROMISE.
In October 2010, we ?ew our 100 millionth guest, a young, newly married Indonesian housewife who was going to
visit her husband working in India. Just as we made her travel dream come true, we are delighted to have done the
same for more than 100 million guests.
We have kept our fares down thanks to our disciplined focus on keeping our operating costs the lowest among the
world’s airlines. We offer a million free tickets every year. While enabling everyone to ?y, we are also connecting
people to places that were never connected by air before. We have achieved our Vision of being the largest low-cost
airline in Asia, serving those who previously had no access nor the means to enjoy air travel. We have done this by
staying close to our Mission of:
• being the best company to work for, treating each Allstar as a member of our extended AirAsia family
• creating a globally recognised ASEAN brand
• maintaining the highest quality product, embracing technology to reduce costs and enhance service levels
Central to our promise is our great team of Allstars who have proven time and again that hard work, creativity,
passion and a commitment to excellence are what it takes to be not just good, but great. These traits of our
Allstars, combined with our ?ve core values of Safety, Passion, Integrity, Caring and Fun, have kept AirAsia growing
from strength to strength. They have made us the World’s Best Low Cost Airline, as vouchsafed by 18 million
travellers polled by London-based consultancy Skytrax.
This is an award that is close to our heart because it validates the value of our promise. Now everyone can ?y.
WHAT’S
INSIDE?
>
CONTENTS
Business Review
78 Connecting ASEAN and Beyond
84 Thailand – Celebrating a New All-A320 Fleet
90 Indonesia – Truly International Airline
96 AirAsia X – The Sky’s the Limit
100 The Social Network
102 A Lifestyle Brand
Key Initiatives
106 Our Guests are our Priority
109 Allstars, Every Single One
114 Our Safety Commitment
118 An Airline With a Giant Heart
Accountability
124 Statement on Corporate Governance
131 Audit Committee Report
135 Statement on Internal Control
137 Additional Compliance Information
138 Financial Statements
Other Information
220 Analysis of Shareholdings
222 List of Top 30 Shareholders
223 List of Properties Held
224 Group Directory
226 Glossary
Form of Proxy
06 Notice of Annual General Meeting
08 Statement Accompanying the Notice of
Annual General Meeting
11 Financial & Investor Calendar
Corporate Framework
12 Corporate Information
16 How We’ve Conquered the ASEAN Sky
18 Milestones Over a Decade
24 AirAsia Group
26 Awards & Accolades 2010
28 Past Awards
30 Media Highlights in 2010
Performance Review
32 Group Financial Highlights
34 Balance Sheets
35 Share Performance
Leadership
40 Board of Directors
42 Directors’ Pro?le
48 Senior Management
Perspective
58 Chairman’s Statement
64 Group CEO’s Report
“ This is a fantastic
achievement for AirAsia
to be here collecting
the award as the
World’s Best Airline
for the second year
running. They are clearly
meeting and exceeding
their customers’
expectations to have
been named winner of
this outstanding global
recognition. ”
Mr Edward Plaisted
Skytrax Chairman
The World’s
Best Low Cost
Airline 2010
now everyone can fy
NOTICE OF
ANNUAL GENERAL
MEETING
NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meeting of AirAsia Berhad (284669-W)
(“AirAsia” or “the Company”) will be held at AirAsia Academy, Lot PT25B, Jalan KLIA S5, Southern
Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan, Malaysia on
Monday, 20 June 2011 at 10.00 a.m. for the following purposes:-
AS ORDINARY BUSINESS
1. To receive and consider the Audited Financial Statements together with the Reports of the Directors and Auditors
thereon for the ?nancial year ended 31 December 2010.
2. To declare a First and Final Dividend of 30% or 3 sen per ordinary share of RM0.10 for the ?nancial year ended
31 December 2010 comprising as follows:-
(i) Gross Dividend of 9.1% per ordinary share of RM0.10 less Malaysian Income Tax at 25%;
(ii) Tax Exempt Dividend of 0.2% per ordinary share of RM0.10; and
(iii) Single Tier Dividend of 20.7% per ordinary share of RM0.10.
3. To approve Directors’ Fees of RM2,203,000 for the ?nancial year ended 31 December 2010.
4. To re-elect the following Director who retires pursuant to Article 124 of the Company’s Articles of Association:
a) Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
5. To re-elect the following Director who retires pursuant to Article 130 of the Company’s Articles of Association:
a) En. Mohd Omar bin Mustapha
6. To consider and, if thought ?t, pass the following resolution pursuant to Section 129 of the Companies Act, 1965:
“THAT Dato’ Leong Sonny @ Leong Khee Seong, retiring in accordance with Section 129 of the Companies Act, 1965,
be and is hereby re-appointed as a Director of the Company to hold of?ce until the next Annual General Meeting.”
7. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors to ?x their
remuneration.
AS SPECIAL BUSINESS
To consider and if thought ?t, to pass, with or without modi?cations, the following Resolution:
8. ORDINARY RESOLUTION
AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approval of relevant authorities,
the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms
and conditions and for such purposes as the Directors may, in their absolute discretion, deem ?t provided that the
aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of
the Company for the time being and that the Directors be and also empowered to obtain approval for the listing of and
quotation for the additional shares so issued on the Main Market of Bursa Malaysia Securities Berhad AND THAT such
authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”
OTHER ORDINARY BUSINESS
9. To transact any other business of which due notice shall have been given.
NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE
NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Eighteenth Annual General Meeting
of the Company to be held on Monday, 20 June 2011, a First and Final Dividend of 30% of 3 sen per ordinary share of
RM0.10 for the ?nancial year ended 31 December 2010 will be paid on Tuesday, 19 July 2011 to depositors whose names
appear in the Record of Depositors on Monday, 20 June 2011. A depositor shall qualify for entitlement to the dividend only in
respect of:-
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
(Resolution 7)
(Resolution 8)
PAGE >
6
AIRASIA BERHAD
ANNUAL REPORT
2010
(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on Monday, 20 June 2011, in respect of ordinary transfers; and
(b) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.
BY ORDER OF THE BOARD
JASMINDAR KAUR A/P SARBAN SINGH
(MAICSA 7002687)
Company Secretary
Selangor Darul Ehsan
27 May 2011
NOTES ON APPOINTMENT OF PROXY
a. Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Article 43(1) of the Company’s
Articles of Association, only those Foreigners (as de?ned in the Articles) who hold shares up to the current prescribed foreign ownership
limit of 45.0% of the total issued and paid-up capital, on a ?rst-in-time basis based on the Record of Depositors to be used for the
forthcoming Annual General Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not entitled to vote, will similarly not be
entitled to vote. Consequently, all such disenfranchised voting rights shall be automatically vested in the Chairman of the forthcoming
Annual General Meeting.
b. A member entitled to attend and vote is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative), to
attend and vote in his stead. A proxy need not be a member of the Company.
c. The Proxy Form in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either
under its common seal or under the hand of an of?cer or attorney duly authorised.
d. Where a member appoints two proxies, the appointment shall be invalid unless he speci?es the proportion of his shareholdings to be
represented by each proxy.
e. Where a member of the Company is an authorised nominee as de?ned under the Securities Industry (Central Depositories) Act, 1991,
it may appoint at least one but not more than two (2) proxies in respect of each securities account it holds to which ordinary shares in
the Company are credited.
f. The Proxy Form or other instruments of appointment shall not be treated as valid unless deposited at the Registered Of?ce of the
Company at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-
eight (48) hours before the time set for holding the meeting. Faxed copies of the duly executed form of proxy are not acceptable.
EXPLANATORY NOTES:
1. Authority to allot shares pursuant to Section 132D of the Companies Act, 1965 (Resolution 8)
Ordinary Resolution 8 has been proposed for the purpose of renewing the general mandate for issuance of shares by the Company
under Section 132D of the Companies Act, 1965 (hereinafter referred to as the “General Mandate”). Ordinary Resolution 8, if passed,
will give the Directors of the Company authority to issue ordinary shares in the Company at their discretion without having to ?rst
convene another General Meeting. The General Mandate will, unless revoked or varied by the Company in a General Meeting, expire
at the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting is
required by law to be held, whichever is earlier.
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the
Seventeenth Annual General Meeting held on 24 June 2010 which will lapse at the conclusion of the Eighteenth Annual General Meeting.
The General Mandate, if granted, will enable the Company to ful?ll its obligations under the Company’s Employees’ Share Option
Scheme in an expedient manner as well as provide ?exibility to the Company for any future fund raising activities, including but not
limited to further placing of shares for the purposes of funding future investment project(s), repayment of bank borrowing, working
capital and/or acquisition(s) and thereby reducing administrative time and costs associated with the convening of additional
shareholders meeting(s).
2. Datuk Alias bin Ali who retires pursuant to Article 124 of the Company’s Articles of Association, will not be seeking for re-election at the
forthcoming Annual General Meeting of the Company and therefore shall retire at the conclusion of the said Annual General Meeting.
PAGE >
7
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTOR STANDING FOR RE-APPOINTMENT AT THE EIGHTEENTH ANNUAL GENERAL MEETING OF
THE COMPANY
The Independent Non-Executive Director who is standing for re-appointment at the Eighteenth Annual
General Meeting is as follow:
a) Pursuant to Section 129 of the Companies Act, 1965:
i) Dato’ Leong Sonny @ Leong Khee Seong
The details of the above Director standing for re-appointment are set out in the Pro?le of Directors from
pages 42 to 47 of this Annual Report.
STATEMENT
ACCOMPANYING THE
NOTICE OF ANNUAL
GENERAL MEETING
FOR THE YEAR ENDED 31 DECEMBER 2010
PAGE >
8
AIRASIA BERHAD
ANNUAL REPORT
2010
Over 150 Years
of Looking to the Future.
Your Future.
Credit Suisse. Helping you to take the next step.
credit-suisse.com
8422 }n, |u;omon;y Pu;ud;p¦u), 2) ) 20)).4.2) ¯÷ 0,·,0·)0
? 25-27 January 2010
AirAsia’s participation in BNP
Paribas Securities Asia –
ASEAN Conference, Singapore
? 27 March 2010
AirAsia’s participation in Invest
Malaysia, Kuala Lumpur
? 18 August 2010
Announcement of the
unaudited results for the 2nd
quarter ended 30 June 2010
? 4 February 2010
AirAsia’s participation in
Raymond James Growth Airline
Conference, New York
? 31 May 2010
Announcement of the
unaudited results for the 1st
quarter ended 31 March 2010
? 13-17 September 2010
AirAsia’s participation in CLSA
Investor’s Forum, Hong Kong
? 25 February 2010
Announcement of the
unaudited results for the 4th
quarter and full year ended
31 December 2009
? 24 June 2010
17th Annual General Meeting
of the Company
? 21 October 2010
AirAsia’s participation in Invest
Malaysia, Hong Kong
? 23 March 2010
AirAsia’s participation in Credit
Suisse Asian Investment
Conference, Hong Kong
? 30 June - 2 July 2010
AirAsia’s participation in Invest
Malaysia, Europe (London,
Paris, Edinburgh)
FINANCIAL
& INVESTOR
CALENDAR
? 25 November 2010
Announcement of the
unaudited results for the
3rd quarter ended 30
September 2010
? 8 December 2010
AirAsia’s participation in
Macquarie Asia Pacifc
Infrastructure and
Transportation Conference
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
11
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Non-Independent Non-Executive Chairman
Dato’ Sri Dr. Anthony Francis Fernandes
(commonly known as
Dato’ Sri Dr. Tony Fernandes)
Group Chief Executive Of?cer
Dato’ Kamarudin bin Meranun
Deputy Group Chief Executive Of?cer
Conor Mc Carthy
Non-Independent Non-Executive Director
Dato’ Leong Sonny @ Leong Khee Seong
Independent Non-Executive Director
Dato’ Fam Lee Ee
Independent Non-Executive Director
Datuk Alias bin Ali
Independent Non-Executive Director
Dato’ Mohamed Khadar bin Merican
Independent Non-Executive Director
En. Mohd Omar bin Mustapha
Independent Non-Executive Director
AUDIT COMMITTEE
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
Datuk Alias bin Ali
Dato’ Mohamed Khadar bin Merican
REMUNERATION COMMITTEE
Datuk Alias bin Ali
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
NOMINATION COMMITTEE
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Datuk Alias bin Ali
Dato’ Fam Lee Ee
SAFETY REVIEW BOARD
Conor Mc Carthy
Dato’ Mohamed Khadar bin Merican
COMPANY SECRETARY
Jasmindar Kaur A/P Sarban Singh
(Maicsa 7002687)
AUDITORS
PricewaterhouseCoopers
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
50706 Kuala Lumpur, Wilayah Persekutuan
Malaysia
Tel : (603) - 21731188
Fax: (603) - 21731288
REGISTERED OFFICE
AirAsia Berhad (Company No. 284669-W)
25-5, Block H, Jalan PJU 1/37
Dataran Prima, 47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Tel : (603) - 78809318
Fax: (603) - 78806318
E-mail : [email protected]
Website : www.airasia.com
PAGE >
12
AIRASIA BERHAD
ANNUAL REPORT
2010
HEAD OFFICE
LCC Terminal, Jalan KLIA S3
Southern Support Zone, KLIA
64000 Sepang,
Selangor Darul Ehsan, Malaysia
Tel : (603) - 86604333
Fax: (603) - 87751100
SHARE REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Tel : (603) - 78418000
Fax: (603) - 78418008
SOLICITORS
Messrs Logan Sabapathy & Co.
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
(Listed since 22 November 2004)
(Stock code: 5099)
PAGE >
13
AIRASIA BERHAD
ANNUAL REPORT
2010
“ The AirAsia route map
has so many exciting
destinations that it is
almost impossible to
choose a favourite.
I’ve seen some of the
world’s greatest temples,
beaches, historical
and cultural sites.
I’ve met some of the
most beautiful people
imaginable along the way
which is always a travel
highlight in itself. ”
Exploring
ASEAN
David
Australia
now everyone can fy
AIRASIA NEEDS NO INTRODUCTION IN ASEAN, WHERE IT IS THE LEADING LOW-COST
CARRIER, CONNECTING PEOPLE AND PLACES ACROSS 132 ROUTES, 40 OF WHICH ARE
OFFERED BY NO OTHER AIRLINE. IN 2010, THE GROUP, WHICH INCLUDES AFFILIATES
AIRASIA THAILAND AND AIRASIA INDONESIA, REINFORCED ITS LEADERSHIP POSITION
WITH TWO REMARKABLE MILESTONES: FLYING ITS 100 MILLIONTH GUEST AND
BREAKING THE RM1 BILLION PROFIT BARRIER.
HOW WE’VE
CONQUERED
THE ASEAN SKY
From an airline with two aircraft
plying six routes in Malaysia
in January 2002, AirAsia has
soared in the last nine years
to cover 65 destinations in 18
countries. Today, employing
more than 8,000 staff and with
a market capitalisation of just
over RM7.06 billion (as at 31
December 2010), it is the only
Truly ASEAN airline, serving the
region’s 600 million population
from 10 hubs in three countries
- Kuala Lumpur, Kuching, Penang
and Kota Kinabalu in Malaysia;
Bangkok and Phuket in Thailand;
and Jakarta, Bali, Bandung and
Surabaya in Indonesia.
In 2011, we introduced two
hubs, Chiang Mai for AirAsia
Thailand and Medan for AirAsia
Indonesia.
Singapore functions as a virtual
hub where AirAsia features
among the top 10 airlines
in terms of contribution to
passenger traf?c. Further
strengthening its ASEAN
network, the Group in December
2010 signed an agreement to
establish a Philippine-based low-
cost af?liate, which is expected
to be operational by end 2011.
The quest to democratise air
travel began when Tune Air
Sdn. Bhd. – founded in 2001
by Dato’ Sri Dr. Tony Fernandes,
Dato’ Pahamin Ab. Rajab, Dato’
Kamarudin Meranun and Dato’
Aziz Bakar - bought over the loss-
making, debt-riddled AirAsia from
HICOM Holdings Berhad (now
DRB-HICOM Berhad) for a token
sum of RM1. The enterprising
group quickly settled the airline’s
debts and set about rebranding
and relaunching AirAsia as a low-
fare carrier.
The Group’s entire business
model centres around a low-cost
philosophy which requires its
operations to be lean, simple
and ef?cient. Several key
strategies have been employed
towards this effect, including:
• High Aircraft Utilisation
AirAsia focuses on high
frequency and high
turnaround of ?ights, both
of which add to customer
convenience and greater
cost ef?ciencies. Its
turnaround of 25 minutes is
the fastest in the region.
FACTS AT A GLANCE
>
Incorporated in
2001
>
No. of Destinations
65
in 18 countries
>
No. of Employees
8119
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
16
• Low Fare, No Frills - This
means no frequent fyer
miles or airport lounges in
exchange for lower fares.
Guests have the choice of
paying for in-?ight meals,
snacks and drinks.
• Point to Point Network
All short-haul AirAsia ?ights
(four-hour ?ight radius or
less) and medium- to long-
haul AirAsia X ?ights are non-
stop, doing away with the
need for human resources,
physical infrastructure and
facilities at transit locations.
In addition, a decision was made
in December 2004 to convert
the existing ?eet of ageing
Boeing B737s with the higher
capacity yet more fuel-ef?cient,
reliable and cost-ef?cient Airbus
A320s. As a result, today, the
Group boasts the largest and
newest A320 ?eet in the region.
Of its 90 aircraft, 86 are A320s,
and the Group has in its order
book an additional 89 A320s to
be delivered. The four remaining
B737s in AirAsia Indonesia
are to be phased out by 2012,
following which there will be
less duplication of manpower
requirements and reduced need
to stock maintenance parts.
Collectively, these strategies
have established AirAsia as the
lowest-cost airline in the world,
with a cost/ASK (available seat
kilometre) of US3.67c. This
has been achieved without
compromising safety. The
highest priority is given to
safe operations, and AirAsia
complies with conditions as
set by regulators in all the
countries where it operates. The
Group also partners with the
most renowned maintenance
providers to ensure its ?eet is
always in the best condition.
Innovative use of technology
has played a key role in AirAsia’s
success story, beginning with
online booking. It was the ?rst
airline in Asia to go ticketless -
in March 2002 - allowing guests
to pay for their bookings by
credit card over the phone. Over
the years, it has built on its IT
platform to increase the ease of
customer transactions as well
as provide greater savings to the
Group. In 2010, AirAsia unveiled
its latest IT booking innovation
in the form of New Skies, which
allows customers to better
manage their online bookings.
With the advent of the social
media, tools such as Facebook,
Twitter and blogs have become
integral to the Group’s customer
relationship initiatives. AirAsia
is, in fact, recognised as the
most popular airline in the
region on Facebook in terms of
fan base.
The spirit of innovation is also
re?ected in AirAsia’s ?nancial
strategies. The company’s
spectacular turnaround within
18 months of operations sealed
the stamp of ?nancial wizardry
that has continued to help the
airline grow and win accolades
such as the 2010 Asiamoney’s
Best Managed Company.
While known for its no-frills
approach, AirAsia is also
synonymous with youthful energy
and a cheeky sense of fun, as
captured in its campaigns and
branding strategies. The airline
regularly sponsors sporting and
entertainment events, and in
2010 launched AirAsiaRedTix.
com, an online gateway to world-
class performances.
AirAsia is ultimately a people’s
airline. This is mirrored in
numerous acts of generosity
that show the management truly
cares. In January 2010, the
Group joined hands with UNICEF
to raise RM438 million (US$128
million) for relief efforts targeted
at Haitians affected by the
earthquake. The airline also
runs an on-going Donate Your
Loose Change campaign to help
needy heart patients receive
treatment at the National Heart
Institute in Kuala Lumpur.
The Group’s adherence to best
practices has been recognised
via numerous awards over the
years. Perhaps most notably
AirAsia has been voted the
World’s Best Low Cost Airline for
two consecutive years, in 2009
and 2010. This award, from
Skytrax, re?ects the opinions
of about 18 million travellers
worldwide who were polled
by the London-based aviation
consultant. AirAsia feels proud
of such endorsement and is
committed to living up to guests’
expectations by continuing to
keep costs down while providing
the highest levels of service
and ef?ciency as it spreads its
wings further and wider across
the skies.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
17
MILESTONES
OVER A DECADE
2001
8 September Tune Air Sdn.
Bhd. signs a Sales & Purchase
Agreement with DRB-Hicom for
the takeover of AirAsia.
8 December Tune Air Sdn. Bhd.
of?cially takes over AirAsia.
2002
January AirAsia is re-branded
and re-launched as Asia’s ?rst
low-cost carrier.
1 March AirAsia goes ticketless,
in line with its Easy to Call, Easy
to Pay and Easy to Fly approach,
which allows guests to pay for
their bookings by credit card
over the telephone.
13 July AirAsia launches a new
destination to Miri in Sarawak.
17 August AirAsia introduces
direct ?ights between Kuala
Lumpur and Tawau in Sabah.
2003
19 August AirAsia launches the
world’s ?rst airline SMS booking.
31 October AirAsia announces
the setting up of a new hub
in Senai, Johor Bahru, with
direct ?ights to Kota Kinabalu,
Kuching, Langkawi and Penang.
12 November AirAsia partners
with domestic entrepreneurs
in Thailand to establish AirAsia
Thailand.
8 December AirAsia launches its
?rst regional ?ight to Phuket.
18 December First AirAsia
?ight takes off from Senai,
Johor Bahru, heading for Miri in
Sarawak.
2004
16 February AirAsia Thailand
launches its ?rst international
?ight, linking Bangkok and
Singapore.
27 February AsiaAsia enters into
a strategic partnership with Pos
Malaysia to enable guests to
remit payments through any Pos
Malaysia branch nationwide.
11 April AirAsia launches its
service to Soekarno-Hatta
Airport, Jakarta, from the
airline’s hub in Senai, Johor
Bahru. It is the airline’s
?rst ?ight to an Indonesian
destination.
31 May AirAsia announces the
launch of the long-awaited direct
?ight to Jakarta from Kuala
Lumpur International Airport.
6 June AirAsia Thailand starts
services between Penang and
Bangkok.
2 July AirAsia’s direct ?ight
connecting Kuala Lumpur and
Jakarta gets off to a ?ying start,
with a full passenger load.
8 July AirAsia expands its
presence in Indonesia, linking
Malaysia to several key
Indonesian tourist destinations,
including Bali and Medan.
19 October AirAsia launches its
IPO Prospectus for the airline’s
proposed listing on the Main
Board of Bursa Malaysia.
2005
19 January AirAsia commences
service between Singapore and
Jakarta through its sister airline
AWAIR (now AirAsia Indonesia).
AirAsia has a 49% stake in
AWAIR, a privately owned
airline in Indonesia, which was
relaunched as a low-fare, no-
frills airline to serve domestic
and international routes out of
its hub at the Soekarno-Hatta
International Airport, Jakarta.
7 March AirAsia receives the
prestigious Market Leadership
Award at the 2005 Airline
Achievement Awards by Air
Transport World Magazine in
Washington, DC, USA.
22 July AirAsia announces a
one-year deal with Manchester
United under which it became
the football club’s Of?cial Low
Fare Airline.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
18
2005 - 2007
23 August AirAsia becomes the
?rst airline in the world to offer
a total, comprehensive booking
system targeting mobile phones
and wireless devices.
1 November AirAsia commences
daily ?ights from Kuala Lumpur
to Phnom Penh, Cambodia.
2 December AirAsia offers
two million free seats in
conjunction with its 4th
anniversary celebrations. The
ground-breaking campaign was
promoted in seven countries.
8 December AirAsia’s ?rst
Airbus A320 arrives at Kuala
Lumpur International Airport
from Toulouse, France.
27 December AirAsia introduces
direct ?ights from Kuala Lumpur
to Siem Reap, Cambodia.
2006
18 January AirAsia and Galileo
sign a global agreement for
exclusive access to low fares,
enabling AirAsia to reach and
serve an even larger and wider
network of markets.
22 April DYMM Seri Paduka
Baginda Yang Dipertuan Agong
XII, Tuanku Syed Sirajuddin (King
of Malaysia) visits AirAsia’s new
home at the LCC Terminal, Kuala
Lumpur International Airport,
and presents certi?cates to
graduates from the AirAsia cadet
pilot training programme.
31 May AirAsia dispatches an
extra ?ight from Kuala Lumpur
to Solo in Indonesia to aid
humanitarian and relief work
in Yogyakarta, Central Java,
following an earthquake in the
Indonesian city.
20 June AirAsia partners with
AIG S.E. Asia Pte. Ltd. to
become the ?rst low-fare airline
in Asia to offer a web-integrated
travel protection sales platform.
4 July AXN, a leading
international action and
adventure cable channel,
announces AirAsia’s
participation as the Of?cial
Airline Partner for the Asian
edition of the three-time Emmy
award-winning Amazing Race
reality series.
MILESTONES
OVER A DECADE
6 July AirAsia announces Kota
Kinabalu as its latest hub in
Malaysia.
20 July AirAsia establishes
another hub in East Malaysia in
Kuching, Sarawak.
14 August Airbus launches its
state-of-the-art Airbus A320
full ?ight simulators at the new
AirAsia Academy.
8 September AirAsia and
Manchester United extend their
partnership and bring in Tourism
Malaysia as a new co-sponsor.
4 October AirAsia makes its
entry into Vietnam with the
launch of daily ?ights from Kuala
Lumpur to Hanoi.
14 November AirAsia and
Amadeus, a global leader in
technology and distribution
solutions for the travel and
tourism industry, announce
an agreement under which
the airline aims to reach a
wider international market by
distributing and selling its seats
through the Amadeus system.
2007
5 April AirAsia announces its
partnership as Of?cial Airline
of the AT&T Williams’ F1 team
for three years with effect from
the 2007 Formula One World
Championship.
15 May AirAsia introduces a
new service, Xpress Boarding,
offering guests the opportunity
to be among the ?rst to board
and have the greatest choice of
seats.
4 August AirAsia announces the
enhancement of its amenities
to accommodate the needs of
disabled guests.
15 August AirAsia launches its
in-?ight magazine, Travel3Sixty.
5 December AirAsia places
the world’s largest order for
the Airbus A320, totaling 225
aircraft, making it the biggest
operator of the aircraft in the
world.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
19
17 June The airline introduces
AirAsia On-Time Guarantee
(OTG) entitling guests whose
?ights are delayed for more than
three hours to a RM200 AirAsia
e-gift voucher.
25 June AirAsia celebrates an
amazing achievement by hitting
the 50 million guests mark after
just six years in operation.
14 August AirAsia launches a
new route linking Pekanbaru in
Indonesia with Singapore.
26 September AirAsia
announces four additional daily
direct ?ights from Kuala Lumpur
to Singapore.
7 October AirAsia becomes
all-Airbus, with a ceremony to
mark the retirement of its ?nal
Boeing B737-300 aircraft from
its Malaysian operations.
23 October AirAsia announces
that beginning 1 November
2008, its On-Time Guarantee
(OTG) waiting time will be
reduced from three to two hours,
an indication of the airline’s
con?dence that an all-Airbus
?eet would improve reliability.
1 November AirAsia celebrates
its inaugural ?ight from Kota
Kinabalu to Singapore.
11 November AirAsia becomes
the ?rst airline in the world
to completely eliminate fuel
surcharges, despite the rising
price of oil.
14 November AirAsia receives
the PIKOM ICT Organisation
Excellence Award based on its
fast growing passenger volume
and use of ICT.
1 December AirAsia launches
its ?rst route to India, to
Tiruchirapalli (Trichy) in the
southern Indian state of Tamil
Nadu.
16 December AirAsia launches
a massive regional marketing
campaign as part of its initiative
to help revive Thailand’s tourism
industry following political
disturbances in the Land of
Smiles.
2008
11 January AirAsia launches
its Donate Your Loose Change
campaign jointly with the
National Heart Institute (IJN)
to raise funds for needy heart
patients.
16 January AirAsia launches its
maiden ?ight from Kuala Lumpur
to Guangzhou, China.
1 February AirAsia starts two
daily ?ights from Kuala Lumpur
to Singapore.
20 March AirAsia unveils the
world’s ?rst commercial A320
aircraft with a Formula One team
livery, that of the AT&T Williams
team, to mark the airline’s
extended three-year partnership
with the Formula One team.
9 May AirAsia extends
assistance to victims of
Cyclone Nargis in Myanmar
by sponsoring ?ights for aid
workers and transporting aid
materials.
10 June AirAsia celebrates
another proud achievement
by of?cially launching its
?nal domestic destination to
Kuantan, thus completing the
airline’s domestic expansion.
2008 - 2009
MILESTONES
OVER A DECADE
2009
12 January AirAsia implements
a simpler and convenient
new baggage policy dubbed
‘Supersize’, allowing guests
to choose from three tiers of
baggage sizes when purchasing
their ?ight seats online.
12 February AirAsia introduces
Pick A Seat, allowing guests to
designate their seat preference
on board the aircraft.
17 February AirAsia introduces
web check-in, a self check-in
facility across the entire AirAsia
Group network. With the new
innovation, guests are able
to save time on pre-departure
procedures.
2 March Over 50,000 seats on
AirAsia’s new routes between
Singapore and the Indonesian
cities of Jakarta, Bandung,
Yogyakarta and Bali were
snapped up by travellers at the
end of a six-day promotion in
conjunction with the routes’
maiden sale.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
20
6 July AirAsia expands its
route network from its Penang
hub with ?ights to Hong Kong,
AirAsia’s 6th international
service from Penang after
Singapore, Bangkok, Medan,
Jakarta and Macau.
9 July AirAsia launches Redbox
(now known as AirAsia Courier),
the world’s ?rst low-cost courier
service, offering the best value-
for-money shipment option in
Malaysia.
17 July AirAsia Indonesia
announces the launch of a
new route linking Bali to Perth,
Australia. The route proves
so popular that the airline
subsequently increases its
frequency to four daily fights.
8 August AirAsia marks
the 42nd ASEAN Day with a
celebration that involved an
AirAsia aircraft bearing a ‘Truly
ASEAN’ livery transporting
more than 100 of?cials,
media, academics and NGO
representatives led by ASEAN
Secretary-General Dr Surin
Pitsuwan to three cities in one
day – Jakarta, Kuala Lumpur and
Bangkok.
19 August AirAsia continues
to strengthen its ASEAN
connectivity by increasing its
fight frequency to Vietnam
through AirAsia Indonesia with a
new ?ight linking Jakarta and Ho
Chi Minh City.
9 October AirAsia signs up as
the of?cial airline partner of
the ?edgling ASEAN Basketball
League.
12 October AirAsia launches a
regional effort to position the
world’s best low-cost airline as
a high quality, sleek and cool
brand with a Have You Flown
AirAsia? campaign.
13 November AirAsia sets a new
world record with its 1 Million
Free Seats Campaign launched
on 11 November, and breaks
it the very next day. Navitaire,
its host reservation provider
that powers booking engines to
many airlines around the world,
announces that AirAsia set a
new international sales record
with 402,222 seats snapped up
in the 24-hour period after the
campaign was launched.
7 December AirAsia caps its
8th anniversary celebrations
by becoming the most popular
airline in the world on giant
social networking site Facebook,
surpassing all other airlines
– even all other transport
companies – in terms of fan
numbers.
1 April AirAsia is named the
World’s Best Low Cost Airline
by London-based aviation
consultancy Skytrax based on
its Annual World Airline Survey,
which polled more than 16
million air travellers.
28 April AirAsia partners
with Scicom (MSC) Berhad to
establish a world-class, state-of-
the-art contact centre to service
the low- cost carrier’s guests
from all around the world.
12 May AirAsia gives away one
million free seats, setting yet
another benchmark in corporate
social responsibility.
1 June AirAsia of?cially
celebrates its newest
international route from Penang,
the Pearl of the Orient, to
Singapore, the Lion City.
24 June AirAsia abolishes the
administration fee from its fare
structure to further stimulate
travel and tourism in Malaysia
and the region.
2 July AirAsia launches another
international route from Kota
Kinabalu to Brunei to boost its
East Malaysia connectivity. The
new service is the airline’s 6th
international service from Kota
Kinabalu.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
21
2010
20 January AirAsia introduces
its Self Check-In service,
providing guests with a quicker
and more convenient way of
checking in.
22 January AirAsia joins hands
with UNICEF and helps channel
RM438 million (US$128 million)
towards helping children and
families in Haiti as part of
UNICEF’s 2010 Haiti Earthquake
Children’s Appeal.
26 January AirAsia and AirAsia X
launch direct ?ights to six new
destinations in India in the ?rst
quarter of 2010. Five of the
?ights were from Kuala Lumpur
to key metro cities of Chennai,
Bangalore, Hyderabad, Mumbai
and New Delhi and one from
Penang to Chennai.
10 February AirAsia becomes
the title sponsor of the 2010
AirAsia British Grand Prix at
Silverstone.
8 March AirAsiaRedTix.com is
launched, providing a smart
and convenient way to discover
and book tickets to a line-up
of international world-class
concerts and more.
8 April AirAsia of?cially signs a
strategic partnership agreement
between VietJet Aviation Joint
Stock Company (VietJet Air) and
AirAsia Berhad in Hanoi.
8 April AirAsia collaborates
with Sepang International
Circuit (SIC) to ?eld a
Malaysian team at the 2010
MotoGP World Championship
led by Muhammad Zulfahmi
Khairuddin.
28 April AirAsia launches
the AirAsia ASEAN Driver
Development Program,
expanding its presence in
motor-sports in the region and
stepping up its efforts to help
nurture a world-class Formula
One driver from ASEAN.
2010
MILESTONES
OVER A DECADE
20 May For a second year
running, Skytrax announces
AirAsia as the World’s Best Low
Cost Airline. The annual global
survey by the respected London-
based aviation consultancy
polled 18 million air travellers
worldwide in its annual survey.
11 July AirAsia unveils New
Skies, its state-of-the-art
booking system, placing it
ahead of competitors in offering
high-tech user-friendly booking
features.
27 July I Wayan Arya Sila
Arsadhana, a four-year-old from
Bali, Indonesia, undergoes a
successful heart correction
surgery at the National Heart
Institute (IJN). He is the latest
bene?ciary of AirAsia’s Donate
Your Loose Change campaign,
started in 2008 to raise funds
for needy heart patients to
undergo treatment at the
Institute.
2 September AirAsia becomes
the new title sponsor for the
ASEAN Basketball League’s
(ABL) 2010/2011 season.
24 September AirAsia and Lotus
Racing unveil an AirAsia Airbus
A320 aircraft adorned in the
legendary classic colours of
Lotus Racing.
13 October AirAsia celebrates
?ying its 100 millionth guest,
Irma Dewi, a 23-year-old
housewife from Indonesia who is
presented with 100 free seats.
25 November AirAsia Thailand
becomes an all-Airbus A320
?eet.
16 December AirAsia, through
its fully owned subsidiary
AA International Ltd, enters
into a partnership agreement
with Antonio Cojuangco Jr.,
Michael Romero and Marianne
Hontiveros to establish a low-
cost airline in the Philippines,
AirAsia Philippines.
16 December AirAsia extends
its association with the ASEAN
Basketball League (ABL) by
sponsoring the 2009-2010
Grand Finals Champions,
Philippine Patriots.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
22
100%
AirAsia Corporate Services Limited
100%
Airspace Communications Sdn. Bhd.
100%
AirAsia Go Holiday Sdn. Bhd.
100%
AirAsia (Mauritius) Ltd
AIRASIA
GROUP
AS AT 31 DECEMBER 2010
100%
Aras Sejagat Sdn. Bhd.
49%
AirAsia Pte Ltd
100%
AA Capital Ltd
100%
AirAsia (Hong Kong) Ltd
49%
PT Indonesia AirAsia
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
24
100%
Crunchtime Culinary
Services Sdn. Bhd.
100%
Asia Air Limited
100%
Koolred Sdn. Bhd.
100%
AirAsia (B) Sdn. Bhd.
50%
Asian Contact Centres Sdn. Bhd.
39.9%
AirAsia Philippines Inc
Legend:
Subsidiary Company
Associate Company
100%
AA International Ltd
49%
Thai AirAsia Co. Ltd
49%
AirAsia Go Holiday Co. Ltd
AIRASIA BERHAD
284669-W
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
25
>> JANUARY
AirAsia won The Budgie
World Low Cost Airlines
Asia Paci?c’s Best
Marketing Campaign of the
Year 2010
>> MARCH
Putra Brand Award 2010
– AirAsia Gold – AirAsia
Transportation, Travel and
Tourism
>> MARCH
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
conferred an Honorary
Doctorate of Business
Innovation by Universiti
Teknologi Malaysia
AWARDS &
ACCOLADES
2010
>> MAY
AirAsia received the Global
ICT Award for 2010 in the
private sector category
from the World Information
Technology and Service
Alliance (WITSA) in
Amsterdam
>> APRIL
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
honoured with the title of
Of?cer of the Legion d’
Honneur by the Government
of France in April 2010 for
outstanding contributions to
the French aviation industry
>> MAY
AirAsia Group CEO Dato’ Sri
Dr. Tony Fernandes received
the prestigious Nikkei Asia
Prize 2010 in Tokyo for his
contributions in the Asia
Paci?c region
>> MAY
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes was
the proud recipient of the
Masterclass Global CEO
of the Year Award at the
2nd Malaysia Business
Leadership Award (MBLA)
2010 ceremony for his
immense contributions to
the country’s economy
>>
AirAsia was named the Best
Asian Low Cost Carrier by TTG
at the 21st Annual TTG Travel
Awards 2010 Ceremony & Gala
Dinner in Centara Grand &
Bankok Convention Centre
>> FEBRUARY
AirAsia was awarded for
its Contribution to Taiwan
Tourism category at the
Taiwan Tourism Award
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
26
AWARDS &
ACCOLADES
2010
>> NOVEMBER
AirAsia was awarded the
2010 Aircraft Debt Deal
of the Year for Asia for the
purchase of 16 new Airbus
A320-200 through the
export credit loan ?nancing
provided by BNP Paribas
>> JULY
AirAsia was named one of
the top 10 airlines in the
passenger carriage category
by Changi Airport Group
(CAG)
>> MAY
World Information Technology
and Services Alliance (WITSA)
– Excellence awards 2010 for
Private Sector Excellence –
AirAsia Berhad
>> DECEMBER
Gold Malaysian Media
Awards – Best use of digital
search – AirAsia
>> DECEMBER
AirAsia Group CEO Dato’
Sri Dr. Tony Fernandes
was named Forbes Asia’s
Businessman of the Year
for 2010
>> DECEMBER
AirAsia Group CEO Dato’ Sri
Dr. Tony Fernandes received
the SME Overseas Platinum
Award 2010
>> JULY
CMO Asia Awards for
Excellence in Branding &
Marketing and Entrepreneur
excellence awards
>> OCTOBER
AirAsia was named the Best
Asian Low Cost Carrier for
2010 by TTG at the 21st
Annual TTG Travel Awards
2010 Ceremony & Gala
Dinner in Bangkok
>> JUNE
AirAsia was chosen as the
World’s Best Low Cost
Airline 2010 for the second
consecutive year by Skytrax
AirAsia bagged the Air Cargo
Industry Newcomer of the
Year Award 2010 at ACW
World Air Cargo Awards in
Shanghai
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
27
PAST
AWARDS
>> 2009
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was recognised with a Laureate
Award in the Commercial Air Transport
category at the Annual Laureate Awards by
Aviation Week in Washington DC, USA
• AirAsia was bestowed the coveted Brand
of the Year Award at Media’s Agency of
the Year (AOY) Awards held at the St.
Regis in Singapore
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the TTG Travel
Personality of the Year in the 20th Annual
TTG Travel Awards 2009 Ceremony & Gala
Dinner
• AirAsia was chosen as Brand of the Year
at the Agency of the Year Awards for 2009
by Media Magazine
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was given the 2009 Frost &
Sullivan Excellence in Leadership Award
for Exemplary Leadership Skills in driving
excellence within his organisation
• AirAsia and AirAsia X were joint winners
of the prestigious Centre for Asia Paci?c
Aviation (CAPA) Airline of the Year Award
for 2009 at the CAPA Aviation Awards for
Excellence
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes received the CAPA Legend
Award and entered the CAPA’s Aviation
Hall of Fame
• AirAsia received the World’s Best Low Cost
Airline Award from Skytrax
• AirAsia was named the Best Asian Low
Cost Carrier by TTG
>> 2008
• Low Cost Carrier of the Year awarded by
Kuala Lumpur International Airport (KLIA)
• Commendations of Prestige Award from
Macau Special Administrative Region
• AirAsia recognised as one of the 50 Most
Innovative Companies in the World by
FastCompany.com
• Airline Market Penetration Leadership of
the Year by Frost & Sullivan
• Rising Leaders – The Next 10 Years by
Singapore Institute of International Affairs
(SIIA) in collaboration with AXN Asia
• AirAsia was voted the Best Budget Airline
in Asia in the SmartTravelAsia.com 2008
Best in Travel Poll
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was presented the inaugural
Malaysian Global Brand Icon of the Year
Award by Deputy Prime Minister Dato’ Sri
Najib Tun Razak
• Winner of the Best Newcomer Award at
the prestigious 2008 Budgie World Low
Cost Airline Awards
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Tourism
Personality of the Year at the Libur
Tourism Awards 2008
• AirAsia and AirAsia Indonesia reaped
honours at the prestigious Friends of
Thailand Awards 2008
• AirAsia bagged the Best Asia Low Cost
Carrier Award from TTG for the second
time
• AirAsia emerged Top 5 among the most
recognised and admired airlines in the
Asia-Paci?c region in the Asia Paci?c Top
1,000 Brands survey
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was appointed to the Board of
Directors of Malaysia Tourism Promotion
Board
• AirAsia was awarded the PIKOM ICT
Organisation Excellence Award at the
PIKOM ICT Leadership Awards
>> 2007
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Brand Laureate
Brand Personality Asia Paci?c
• AirAsia ranked as one of Asia’s Best
Emerging Companies with regards to
Corporate Governance by The Asset
magazine
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
28
PAST
AWARDS
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was awarded the Minister’s
Special Recognition Award by Sabah
Tourism Awards 2007
• AirAsia was placed as the Best Low Cost
Airline in Asia by Skytrax Research of
London
• Airline of the Year 2007 by Centre for Asia
Paci?c Aviation
• Airline Human Capital Development
Strategy Award by Frost & Sullivan
>> 2006
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Master
Entrepreneur of the Ernst & Young
Entrepreneur of the Year – Malaysia 2006
• Asia’s Best Budget Airline by
SmartTravelAsia.com under the Best in
Travel 2006 list
• Asia’s Top 100 Brand by Media Magazine,
Hong Kong
>> 2005
• AirAsia received the Transport Company
of Excellence Award from Ports World
Sdn. Bhd. and the Chartered Institute of
Logistics and Transport Malaysia
• Asia’s Best Under a Billion by Forbes
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the Asia Paci?c
Aviation Executive of the Year 2005
• Regional/Low Cost Leadership Award in
Airline Business Strategy Awards 2005 by
Airline Business
>> 2004
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the CAPA Asia
Paci?c Aviation Executive of the Year
2004
• AirAsia was named the Asia Paci?c Low
Cost Airline of the Year 2004 by the
Centre for Asia Paci?c Aviation (CAPA)
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was one of the 25 Stars of Asia
Honorees listing by Business Week
• AirAsia was named the Best Managed
Company in the Airlines and Aviation
Sector by Euromoney
• AirAsia was named the Best Newly Listed
Company (3rd Place) by Euromoney
• Triple A Regional Award for Best Airline
IPO for 2004 by The Asset magazine
• Best IPO of the Year by The Edge
Singapore
• Market Leadership Award by Air Transport
World
>> 2003
• AirAsia Group CEO Dato’ Sri Dr. Tony
Fernandes was named the CEO of the Year
by Business Times and American Express
• AirAsia was named the Asia Paci?c Airline
of the Year 2003 by the Centre for Asia
Paci?c Aviation (CAPA)
• Developing Airline of the Year 2003 by
Air?nance Journal
• CIO Top 100 Honoree for excellence in
strategic IT deployment
• Given Malaysian Superbrands
status by Superbrands International
• airasia.com voted as the most popular
website for online shopping in the 11th
Malaysia Internet User Survey conducted
by ACNielsen Consult
PAGE >
29
AIRASIA BERHAD
ANNUAL REPORT
2010
MEDIA
HIGHLIGHTS
IN 2010
PAGE >
30
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
31
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP FINANCIAL
HIGHLIGHTS
For the year
ended
30 June
For the 6
months ended
31 December For the year ended 31 December
(RM MILLION, UNLESS OTHERWISE STATED) 2007 2007 2008 2009 2010
Revenue
Total expenses
EBIT
Associates contributions
Pro?t before tax
Tax
Net income
BALANCE SHEET
Cash & cash equivalents
Total Assets
Net Debt (Total Debt - Total Cash)
Shareholders' Equity
CASH FLOW STATEMENTS
Net cash from operating activities
Cash ?ow from investing activities
Cash ?ow from ?nancing activities
Net Cash Flow
CONSOLIDATED FINANCIAL PERFORMANCE (%)
Return on total assets
Return on shareholders' equity
R.O.C.E. (EBIT/(Net Debt + Equity))
EBIT Pro?t Margin
Net Income Margin
CONSOLIDATED OPERATING STATISTICS
Passengers carried
Capacity
Load factor (%)
RPK (million)
ASK (million)
Aircraft utilisation (hours per day)
Average fare (RM)
Yield Revenue per ASK (sen)
Cost per ASK (sen)
Cost per ASK - excluding fuel (sen)
Yield Revenue per ASK (USc)
Cost per ASK (USc)
Cost per ASK - excluding fuel (USc)
Number of stages
Average stage length (km)
Size of ?eet at year end (Malaysia)
Size of ?eet at year end (Group)
Number of employees at year end
Percentage revenue via internet (%)
RM-USD average exchange rate
1,603
1,341
262
(4)
278
220
498
595
4,779
1,959
1,662
595
(1,943)
1,509
161
10.4
30.0
7.2
16.3
31.1
8,737,939
11,140,764
78
9,863
12,391
12.0
171
12.9
10.8
5.2
3.65
3.06
1.46
68,195
1,088
34
54
2,924
65
3.54
1,094
875
219
–
277
149
426
425
6,430
3,272
2,099
256
(1,581)
1,141
(184)
6.6
20.3
4.1
20.0
38.9
5,197,567
6,621,276
78
5,930
7,919
11.9
195
13.8
11.0
5.4
4.04
3.23
1.59
38,507
1,183
39
65
3,474
65
3.42
2,855
3,207
(352)
–
(869)
373
(496)
154
9,406
6,453
1,606
(416)
(2,602)
2,749
(269)
–
–
–
–
–
11,808,058
15,660,228
75
14,439
19,217
11.8
204
14.9
16.7
9.5
4.45
5.00
2.83
89,118
1,207
44
78
3,799
70
3.34
3,133
2,220
913
–
622
(116)
506
746
11,398
6,862
2,621
784
(1,777)
1,591
598
4.4
19.3
9.6
29.1
16.2
14,253,244
19,016,280
75
16,890
22,159
12.0
168
14.1
10.0
5.8
4.02
2.85
1.66
105,646
1,166
48
84
4,597
76
3.52
3,948
2,881
1,067
–
1,099
(38)
1,061
1,505
13,240
6,352
3,641
1,619
(1,868)
1,006
757
8.0
29.1
10.7
27.0
26.9
16,054,738
20,616,120
78
18,499
24,362
12.2
177
16.2
11.8
6.9
5.03
3.67
2.13
114,534
1,184
53
90
4,702
77
3.22
Refer to page 226 for glossary.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
32
Revenue
RM Million
Profit Before Taxation
RM Million
Total Assets
RM Million
07 08 09 10 07 08 09 10
07 08 09 10
4
,
7
7
9
9
,
4
0
6
1
1
,
3
9
8
1
3
,
2
4
0
1
,
6
6
2
1
,
6
0
6
2
,
6
2
1
3
,
6
4
1
2
7
8
(
8
6
9
)
6
2
2
1
,
0
9
9
1
,
6
0
3
2
,
8
5
5
3
,
1
3
3
3
,
9
4
8
07 08 09 10
Shareholders’ Equity
RM Million
RM11,398
2009
RM622
2009
RM3,133
2009
RM2,621
2009
RM3,948
2010
RM1,099
2010
2010
RM3,641
2010
RM13,240
GROUP FINANCIAL HIGHLIGHTS
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
33
BALANCE
SHEETS
TOTAL ASSETS
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
Available-for-sale Financial Assets
Other Investments
Inventories
Receivables & Prepayments
Deposits, Cash and Bank Balances
Other Assets
Goodwill
Property Plant and Equipment
Borrowings
Sales in Advance
Trade & Other Payables
Derivative Financial Instruments
Current Tax Liabilities
0.2%
0.2%
13.0%
6.5%
69.7%
10.3%
0.1%
70.3%
10.4%
11.4%
6.5%
1.2%
0.1%
0.1%
2010
2009
86.7%
3.2%
10%
0.1%
2009
81.9%
3.4%
10%
4.7%
2010
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
34
SHARE
PERFORMANCE
SHARE PRICE & VOLUME TRADED
2010 Monthly Trading Volume & Highest-Lowest Share Price
MARKET CAPITALISATION as at 31 December 2010
Total Assets
RM Million
RM7,016
2010
RM3,805
2009
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total
Volume (’000)
180,168,300 62,649,300 187,300,800 101,860,200 113,744,800 146,440,100 212,072,700 244,696,700 195,368,100 129,034,000 180,995,600 143,885,400
Highest (RM) 1.31 1.46 1.45 1.43 1.35 1.33 1.53 1.74 2.25 2.62 2.65 2.74
Lowest (RM) 1.43 1.33 1.27 1.31 1.11 1.22 1.25 1.50 1.75 2.12 2.33 2.53
Jan
1
8
0
,
1
6
8
,
3
0
0
6
2
,
6
4
9
,
3
0
0
1
8
7
,
3
0
0
,
8
0
0
1
0
1
,
8
6
0
,
2
0
0
1
1
3
,
7
4
4
,
8
0
0
1
4
6
,
4
4
0
,
1
0
0
2
1
2
,
0
7
2
,
7
0
0
2
4
4
,
6
9
6
,
7
0
0
1
9
5
,
3
6
8
,
1
0
0
1
2
9
,
0
3
4
,
0
0
0
1
8
0
,
9
9
5
,
6
0
0
1
4
3
,
8
8
5
,
4
0
0
Feb Mar Apr May Jun Jul Aug Sep Oct
Highest
Lowest
Volume
Nov Dec
06
4
,
4
8
5
2
,
0
5
3
3
,
8
0
5
7
,
0
1
6
3
,
5
1
9
07 08 09 10
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
35
AirAsia’s
flying
woman
Nadira Ramli
AirAsia Pilot
now everyone can fy
“ At AirAsia, we are
all treated as equals.
There’s no such thing
as a male or female
pilot. Only good or
great pilots. It’s thanks
to people like Dato’ Sri
Dr. Tony Fernandes who
advocate equal rights. ”
Issued by Barclays Bank PLC, authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange, Barclays Capital is the investment banking
division of Barclays Bank PLC, which undertakes US securities business in the name of its wholly-owned subsidiary Barclays Capital Inc., an SIPC and FINRA member. © 2011 Barclays
Bank PLC. All rights reserved. Barclays Capital is a trademark of Barclays Bank PLC.
DB2011-084 AIR ASIA P.indd 1 5/6/11 4:29:25 PM
BOARD OF
DIRECTORS
DATO’ ABDEL AZIZ @
ABDUL AZIZ BIN ABU BAKAR
DATO’ SRI DR.
TONY FERNANDES
DATO’ KAMARUDIN
BIN MERANUN
DATO’ LEONG
KHEE SEONG
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
40
DATO’ KAMARUDIN
BIN MERANUN
CONOR MC CARTHY
DATO’ FAM LEE EE
DATUK ALIAS BIN ALI
DATO’ MOHAMED KHADAR
BIN MERICAN
MOHD OMAR BIN MUSTAPHA
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
41
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTORS’
PROFILE
DATO’ ABDEL AZIZ @ ABDUL AZIZ BIN ABU BAKAR, Malaysian, aged 58, was appointed as Non-Executive
Director of the Company on 20 April 2005 and on 16 June 2008, he was re-designated to Non-Executive
Chairman. He is also the Chairman of the Nomination Committee. Prior to this, he served as an
Alternate Director of the Company to Dato’ Pahamin Ab. Rajab since 11 October 2004. He also served
earlier as a Director of the Company from 12 December 2001 to 11 October 2004. He is currently
the Non-Executive Chairman of VDSL Network Sdn. Bhd. He is also the Chairman of PAIMM (Academy
of Malaysian Music Industry Association) and PRISM (Performance and Artists Rights Malaysia Sdn.
Bhd.), performers of recorded music collection society. From 1981 to 1983 he was Executive Director of
Showmasters (M) Sdn. Bhd., an artiste management and concert promotion company. He subsequently
joined BMG Music and was General Manager from 1989 to 1997 and Managing Director from 1997
to 1999. He received a Diploma in Agriculture from Universiti Pertanian Malaysia in 1975, his BSc in
Agriculture Business from Louisiana State University, USA in 1978, and an MBA from the University of
Dallas, USA in 1980.
DATO’ ABDEL AZIZ @
ABDUL AZIZ BIN ABU BAKAR
Non-Executive Chairman
PAGE >
42
AIRASIA BERHAD
ANNUAL REPORT
2010
DIRECTORS’ PROFILE
DATO’ SRI DR. TONY FERNANDES,
Malaysian, aged 47, was appointed
Group Chief Executive Of?cer of the
company in December 2001. He is
also a member of the Employees’
Share Option Scheme Committee
of the Board.
He was Financial Controller at
Virgin Communications London
(1987 – 1989), and moved on
to be Senior Financial Analyst at
Warner Music International London
(1989 – 1992), Managing Director
at Warner Music Malaysia (1992 –
1996), Regional Managing Director,
ASEAN (1996 – 1999) and Vice
President, ASEAN at Warner Music
South East Asia (1999 – 2001).
He was admitted as an Associate
Member of the Association of
Chartered Certi?ed Accountants
in 1991, and became a Fellow
Member in 1996.
In 1999, DYMM Sultan Selangor
Sultan Salahuddin Abdul Aziz
Shah bestowed him the title
‘Setia Mahkota Selangor’ for his
contributions to the Malaysian music
industry. He was the recipient of
the ‘Recording Industry Person of
the Year 1997’ by the Recording
Industry Association of Malaysia.
With AirAsia, he received
accolades from international press
and industry observers such as
‘Airline Business Strategy Award
2005 and Low Cost Leadership’ by
Airline Business and ‘Asia Paci?c
Aviation Executive’ by the Centre
for Asia Paci?c Aviation (CAPA) for
the year 2004 and 2005.
In July 2005, he was conferred
the Darjah Datuk Paduka Tuanku
Ja’afar (DPTJ) which carries
the title Dato’ by the Negeri
Sembilan’s Yang DiPertuan Besar
Tuanku Ja’afar Tuanku Abdul,
for his services rendered to the
betterment of the nation and
community. In 2006 and 2007,
he bagged ‘The Brand Laureate’
Brand Personality for his exemplary
performance, dedication and
contribution towards the aviation
industry in Malaysia.
In 2007, he was bestowed the
Darjah Sultan Ahmad Shah
Pahang (DSAP) which carries
the title Dato’ by the Pahang’s
KDYMM Sultan Haji Ahmad Shah
ibni Almarhum Sultan Sir Abu
Bakar Riayatuddin Al-Muadzam
Shah for his services rendered to
the betterment of the nation and
community. In 2008, he was again
honoured by the Sultan with the
Darjah Kebesaran Sultan Ahmad
Shah Pahang Yang Amat Di Mulia
which carries the title Dato’ Sri.
The ‘CAPA Legend Award 2009
(Aviation Hall of Fame)’ recognised
his in?uential actions for directly
shaping the way the aviation
industry has evolved, and the
‘Airline CEO of the Year Award
for 2009’ from Jane’s Transport
Finance was for his success in
leading and growing AirAsia into
the world’s best low-cost airline
and Asia’s largest.
In March 2010, he received an
Honorary Doctorate of Business
Innovation from Universiti Teknologi
Malaysia (UTM) for his role in
changing the face of aviation
and in bene?tting travelers and
economies locally and in the
region.
In April 2010, he was honoured
with the title of ‘Of?cer of
the Legion d’ Honneur’ by
the government of France for
outstanding contributions to the
French aviation industry. It is the
highest rank of honour that the
government of France can award to
a non-French citizen.
The following month, he received
the prestigious Nikkei Asia Prize in
Tokyo for his contributions to the
growth of Asia. The prize, given
by leading Japanese newspaper
publisher Nikkei Inc., recognised
his role in democratising travel in
Asia.
Fernandes also received
the prestigious Forbes Asia
Businessman of the Year 2010
award. He is the ?rst Malaysian
and Southeast Asian to receive the
award.
In February 2011, he was awarded
the Commander of the Order of the
British Empire (CBE) honour by Her
Majesty Queen Elizabeth II. The
award was conferred on him for
services in promoting commercial
and educational links between the
United Kingdom and Malaysia.
In April 2011, Tony was conferred
Darjah Seri Paduka Mahkota
Perak (S.P.M.P) which carries
the title Dato’ Seri at the Istana
Iskandariah in Kuala Kangsar.
DATO’ SRI DR. TONY FERNANDES
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
43
DATO’ KAMARUDIN BIN MERANUN, Malaysian, aged 49, was appointed Director of the Company on 12
December 2001. In January 2004, he was appointed Executive Director and on 8 December 2005, he
was re-designated to Group Deputy Chief Executive Of?cer. He is also the Chairman of the Employees’
Share Option Scheme Committee of the Board.
Prior to joining the Company, he worked in Arab-Malaysian Merchant Bank from 1988 to 1993 as
a Portfolio Manager, managing both institutional and high net-worth individual clients’ investment
funds. In 1994, he was appointed Executive Director of Innosabah Capital Management Sdn. Bhd.,
a subsidiary of Innosabah Securities Sdn. Bhd. He subsequently acquired the shares of the joint
venture partner of Innosabah Capital Management Sdn. Bhd., which was later renamed Intrinsic Capital
Management Sdn. Bhd.
Dato’ Kamarudin received a Diploma in Actuarial Science from University Technology MARA (UiTM)
and was named the “Best Actuarial Student” by the Life Insurance Institute of Malaysia in 1983. He
received a B.Sc. degree with Distinction (magna cum laude) majoring in Finance in 1986, and an MBA
in 1987 from Central Michigan University.
DATO’ KAMARUDIN
BIN MERANUN
Group Deputy
Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
44
CONOR MC CARTHY, Irish, aged 49, was appointed Non-Executive
Director of the Company on 21 June 2004. He heads the Safety
Review Board of the Company. He is Managing Director of
PlaneConsult, a leading aviation business solutions provider which
he set up in 2000 which specialises in advising and establishing
Low Cost Carriers.
Prior to establishing PlaneConsult, Conor was the Director of Group
Operations at Ryanair from 1996 to 2000. Before joining Ryanair, he
was the CEO of Aer Lingus Commuter. Prior to that, he was General
Manager/SVP for Aer Lingus in the Marketing and Strategic Planning
divisions.
He spent 18 years with Aer Lingus in all areas of the airline
business from Engineering, Operations and Maintenance to
Commercial Planning, Marketing and Route Economics to Finance,
Strategic Management, Fleet Planning and General Management.
He is a qualifed Avionics Engineer and holds a First Class Honours
degree in Engineering from Trinity College Dublin.
Mr. Mc Carthy is currently the Chairman of Dublin Aerospace, an
MRO based in Ireland, and also serves as a Director on the Board
of Pegasus Airlines in Turkey.
DATO’ LEONG KHEE SEONG, Malaysian, aged 72, was appointed
Independent Non-Executive Director of the Company on 8 October
2004. He is Chairman of the Audit Committee and a member of
the Remuneration Committee of the Board. He was Deputy Minister
of Primary Industries from 1974 to 1978, Minister of Primary
Industries from 1978 to 1986 and a Member of Parliament from
1974 to 1990. Prior to this, he was a substantial shareholder
of his family’s private limited companies, which were principally
involved in general trading. He was the Chairman of the General
Agreement on Tariffs and Trade’s Negotiating Committee on Tropical
Products (1986 to 1990) and was the Chairman of the Group of 14
on ASEAN Economic Cooperation and Integration (1986 to 1987).
He graduated with a degree in Chemical Engineering in 1964 from
University of New South Wales, Australia. He is an Independent
Non-Executive Director of TSH Resources Berhad and Industrial and
Commercial Bank of China (Malaysia) Berhad.
CONOR MC CARTHY DATO’ LEONG KHEE SEONG
DIRECTORS’ PROFILE
PAGE >
45
AIRASIA BERHAD
ANNUAL REPORT
2010
DATO’ FAM LEE EE, Malaysian, aged 50, was appointed Independent
Non-Executive Director of the Company on 8 October 2004. He
is also a member of the Audit, Remuneration and Nomination
Committees of the Board. He received his BA (Hons) from the
University of Malaya in 1986 and an LLB (Hons) from the University
of Liverpool, England in 1989. He obtained his Certi?cate of Legal
Practice in 1990 and has been practising law since 1991 and
currently is a senior partner at Messrs YF Chun, Fam & Yeo. He also
serves as a Director of M-Mode Berhad.
DATO’ MOHAMED KHADAR BIN MERICAN, Malaysian, aged 55, was
appointed Independent Non-Executive Director of the Company on
10 September 2007. He is also a member of the Safety Review
Board and Audit Committee of the Board. He has had more than
25 years’ experience in ?nancial and general management. He has
been an auditor and a management consultant with an international
accounting ?rm, before joining a ?nancial services group in 1986.
Between 1988 and April, 2003, Dato’ Khadar held several senior
management positions in Pernas International Holdings Berhad
(now known as Tradewinds Corporation Berhad), a company listed
on the Main Market of Bursa Malaysia Securities Berhad, including
as President and Chief Operating Of?cer. He is a member of both
the Institute of Chartered Accountants in England and Wales
and the Malaysian Institute of Accountants. He is also presently
a Director of Rashid Hussain Berhad, RHB Capital Berhad, RHB
Investment Bank Berhad (formerly known as RHB Sakura Merchant
Bankers Berhad) and ASTRO All Asia Networks PLC.
DATO’ FAM LEE EE DATO’ MOHAMED KHADAR
BIN MERICAN
PAGE >
46
AIRASIA BERHAD
ANNUAL REPORT
2010
DATUK ALIAS BIN ALI, Malaysian, aged 63, was appointed
Independent Non-Executive Director of the Company on 23
September 2005. He is also the Chairman of the Remuneration
Committee and a member of the Audit and Nomination Committees
of the Board.
Prior to this, he had a long and distinguished career with the
Government which began soon after his graduation from the
University of Malaya in 1970. He started as an Administration
Trainee Offcer in the Statistics Department. He subsequently joined
the Prime Minister’s Department as Administration Development
Of?cer. Whilst still with the department, he completed his Master
in Business Management and assumed the position of Head
of Department (Consultancy) at the National Institute of Public
Administration (INTAN) in 1975.
Over the next 15 years with the Government, he held various
senior positions in several Ministries and Department including
as Deputy Director of Training (Operations) in the Public Services
Department, Under Secretary (Establishment and Services) in the
Ministry of Works and Director of Industrial Development Division
in the Ministry of Trade and Industry. He moved back to the Prime
Minister’s Department in 1990 as Cabinet Under Secretary. In
June 2000, he was appointed Secretary General of the Ministry of
Health, a post he held until his retirement in March 2004.
Datuk Alias received a Master in Business Management from the
Asian Institute of Management, Philippines in 1975 and a Bachelor
of Economics (Honours) from the University of Malaya in 1970.
He is also presently a Director of FIMA Corporation Berhad, CCM
Duopharma Biotech Bhd. and Melati Ehsan Holdings Bhd.
MOHD OMAR BIN MUSTAPHA, Malaysian, aged 39, was appointed as
Independent Non-Executive Director of the Company on 16 March 2011.
He co-founded Ethos & Company in June 2002. He led Ethos as Managing
Partner from 2002 to 2010, and became Chairman of the ?rm in
January 2011.
As Managing Partner he provided the overall stewardship for the
partnership group and associates, and guides the thought leadership
and client development agenda of the ?rm. In 2004, he took a sabbatical
from Ethos to serve as Special Assistant to Deputy Prime Minister
Dato’ Sri Najib Tun Razak for economic, corporate sector and foreign
policy issues. He re-joined Ethos as Managing Partner in 2006 upon the
untimely passing of his partner and co-founder Dr. Liew Boon Horng. In
2007, he co-founded Ethos Capital, a Malaysian based private equity frm
focused on providing equity capital and management support to growth
companies in Southeast Asia. Ethos Capital’s maiden fund is in excess
of RM200 million.
He has signi?cant experience in the Malaysian and international
corporate and government sectors, where he has engaged with and
advised top level decision makers on issues of business strategy, public
policy and regulatory engagement, corporate governance and leadership,
performance and talent management. Prior to establishing Ethos, he
was a consultant with McKinsey & Company based in Kuala Lumpur and
London. He has served multinational clients in the telecoms, energy,
media, retail, banking and government sectors in Southeast Asia, the
Middle East and Western Europe. He started his career as a Corporate
Planning Manager with Petronas and subsequently as a Vice President
with the Multimedia Development Corporation.
He is a member of the National Economic Council chaired by the Prime
Minister. He was elected by the World Economic Forum as a 2007 Young
Global Leader and is a 2008 Eisenhower Fellow. He is a founder of the
Young Leaders Programme of the World Islamic Economic Forum.
He graduated from Oxford University where he obtained his BA (Hons)
and MA degrees in Politics, Philosophy and Economics. He has attended
advanced leadership studies at the Harvard Kennedy School of
Government.
He also serves as an independent non-executive director on the boards
of Petroliam Nasional Berhad and Symphony House Berhad.
DIRECTORS’ PROFILE
DATUK ALIAS BIN ALI MOHD OMAR BIN MUSTAPHA
Notes:
Family Relationship – None of the Directors
had any family relationship with any director
and/or major shareholder of AirAsia.
Con?ict of Interest – None of the Directors
has any con?ict of interest with AirAsia
Group.
Conviction for Offences – None of the
Directors has been convicted for offences
within the past 10 years other than traf?c
offences, if any.
Attendance at Board Meetings – The
attendance of the Directors at Board of
Directors’ Meeting is disclosed in the
Statement of Corporate Governance.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
47
SENIOR
MANAGEMENT
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
Details of Dato’ Sri Dr. Tony
Fernandes are disclosed in the
Directors’ Pro?le on page 43 of
this Annual Report.
Dato’ Kamarudin bin Meranun
Deputy Group Chief Executive
Of?cer
Details of Dato’ Kamarudin Meranun
are disclosed in the Directors’ Pro?le
on page 44 of this Annual Report.
Tassapon Bijleveld
Chief Executive Of?cer
AirAsia Thailand
Tassapon joined AirAsia Thailand in
2003 as Chief Executive Of?cer and
is entrusted with the responsibility
of overseeing all aspects of the
airline’s operations as well as
driving growth in Thailand. Tassapon
has more than 12 years’ experience
in the consumer products industry,
having worked in various countries
in Southeast Asia and Indochina
for two Fortune 500 companies
– Adams (Thailand) Co. Ltd. (a
division of Warner Lambert) and
Monsanto (Thailand) Co. Ltd. Prior
to joining AirAsia he was Managing
Director of Warner Music (Thailand)
Co. Ltd. for ?ve years.
Captain Dharmadi
Chief Executive Of?cer
AirAsia Indonesia
Dharmadi joined AirAsia Indonesia
in 2007 as Chief Executive Of?cer.
He has more than 32 years’ working
experience in Garuda Indonesia
Airlines, holding several managerial
positions such as Flight Crew
Training Manager, Training Centre
Director, Senior Vice President-
Procurement, and Executive
Vice President-Operations. He
also served as a Captain Pilot
B747-400 Flight Crew in Asiana
Airlines, Korea from 2005-2007.
He holds a Bachelor of Technical
Engineering degree from Indonesia,
and a Master of Management
(International Marketing
Management) degree from PPM
Business School, Indonesia.
Bo Lingam
Chief of Operations and Planning
Bo has worked extensively in the
publication and music industry
at various production houses. He
joined AirAsia in 2001 as Ground
Operations Manager. Prior to his
current appointment as Regional
Head of Operations, Bo held several
other key roles at AirAsia including
as Regional Director – Guest
Services and Senior Manager –
Purchasing and Supplies before he
was seconded to AirAsia Thailand to
oversee and assist in the initial set-
up of AirAsia Thailand operations in
Bangkok.
From left to right: Bo Lingam, Dato’ Kamarudin bin Meranun, Dato’ Sri Dr. Tony Fernandes, Tassapon Bijleveld, Captain Dharmadi
PAGE >
48
AIRASIA BERHAD
ANNUAL REPORT
2010
Rozman bin Omar
Regional Head – Finance
Rozman Omar FCCA is our Regional
Head, Finance. He was part of the
team tasked with the ?otation of
AirAsia Berhad on Bursa Malaysia in
2004 and was also involved in the
formation of AirAsia’s joint ventures
in Thailand and Indonesia. He was
previously Chief Financial Of?cer of
AirAsia Indonesia until 2006. He has
over 22 years of corporate ?nance
experience with various ?nancial
institutions prior to joining the Group.
Kathleen Tan
Regional Head – Commercial
Listed by 4 Hoteliers, a leading hotel
and travel news portal in the industry,
as one of Asia’s top 10 most in?uential
women in the travel industry, Kathleen
helped AirAsia grow from a young
airline to a global and powerful brand
in the aviation industry. An opportunist
marketer and strong advocate of social
media, Kathleen was one of the ?rst
group of marketers to embrace digital,
social media and mobile marketing
as tool to engage with AirAsia guests.
At AirAsia, Kathleen oversees a
huge portfolio that includes Revenue
Management, Marketing, Branding,
Social Media, Sales & Media,
Communications, Social Media, Mobile
and AirAsiaGo.
Johan Aris Ibrahim
Regional Head
Financial Services & Loyalty
Johan Manages Regional non ?ight
ancillary products/services portfolio
which includes Financial Products
which includes Insurance, Co brand
credit cards, savings account,
e Gift Voucher and Payment, Loyalty
Programme, Online entertainment
ticket – airasiaredtix.com and
Merchandise – in-?ight and online-
airasiamegastore.com
Johan has varied consumer marketing
experience with specialisation in
customer loyalty management and
database marketing. He has been
involved in various industries ranging
from oil and gas, banking, and airlines,
to name a few.
He started his career with Shell
Malaysia in various capacities including
development and launch of new
products to the market. One of his
speci?c involvements in Shell was in
the set up and launch of Bonuslink, the
?rst multi party loyalty programme in
Malaysia. He then moved on to set up
RealRewards, another multiparty loyalty
programme, adding a touch of vibrancy
and competition to the industry which
was still nascent, at that point in
time, in Malaysia. He then moved to
banking and spent three years with
Maybank. While in Maybank he was
instrumental in purchasing the AMEX
franchise in Malaysia and establishing
the TreatsPoints programme, amongst
other things. He enjoys new and
“unexpected” challenges. He holds
Andrew Littledale
Group Financial Controller
Andrew has had nearly 22 years’
experience in the banking and industry
sectors, having worked in various
countries such as Chile, Egypt and
the United Kingdom. Prior to joining
AirAsia, he was the Chief Financial
Of?cer for AirAsia X since its inception
in 2007. Andrew’s other appointments
include Group Reporting Manager
of Cookson plc, Group Management
Accountant of FKI plc in London and
Group Financial Accountant with Blue
Circle Industries plc, London. He holds
a bachelor’s degree in Zoology from the
University of London and is an ACMA
qualifed accountant. Andrew is also a
holder of a JAA Private Pilot’s License.
Aireen Omar
Regional Head
Corporate Finance & Treasury
Aireen joined AirAsia in 2006 and
is currently in charge of corporate
?nance, treasury, investor relations
and fuel procurement. She started her
career with Deutsche Bank Securities
in New York. She moved back to
Malaysia in 2001 to join the Maybank
Group where she originated, structured
and executed debt securities, including
Islamic securities. In 2003, she joined
Bumiwerks Capital Management where
she executed asset securitisation,
structured ?nance and project ?nance
securities, including the issue of
Malaysia’s ?rst residential mortgage-
backed securities. Aireen graduated
with a B.Sc. in Economics from London
School of Economics and Political
Science and an MA in Economics from
New York University.
an Actuarial Science degree from the
London School of Economics and
Political Science.
Mazliana binti Mohamad
Regional Head – Audit and Consulting
Service
Mazliana Mohamad was appointed
the Regional Head of Audit and
Consulting Services in 2010. Her
main responsibilities include providing
independent and objective assurance
and consulting services designed
to improve the effectiveness and
ef?ciency of AirAsia’s operations and
integrity of the ?nancial reporting and
to ensure compliance with applicable
laws and regulations.
She has over 14 years of experience
in diverse ?elds that include auditing,
management consulting, corporate
governance and accounting. She began
her career with a ?nancial institution
in 1997, gaining banking experience in
accounting, Basel II, internal auditing,
project management and EWRM.
She had also assisted development
banks in the implementation of
their respective ERM frameworks.
Before joining AirAsia, she was
with a government-owned company
where she was responsible for
establishing internal audit function
and independently reviewing the
national-level ICT strategic initiatives/
projects. She holds an honours degree
in accounting and is Certi?ed Internal
Auditor (USA). She is a Chartered
Member of Institute Internal Auditor
and Chartered Accountant (Malaysia).
SENIOR MANAGEMENT
From left to right: Johan Aris Ibrahim, Aireen Omar, Rozman bin Omar, Kathleen Tan, Andrew Littledale, Mazliana binti Mohamad
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
49
Kamarulzaman bin Ahmad
Regional Head – Strategy,
Innovation and Customer
Experience
Kamarulzaman Ahmad joined
AirAsia the regional low-cost airline
carrier, in September 2010 after
serving PETRONAS for 13 years.
Among Zaman’s achievements
there was his ?ve year involvement
from 2000 – 2005 as Electronic
Systems Engineer for Team Sauber
PETRONAS F1 race team based in
Hinwil, Switzerland, and as Senior
Manager of the Frontier Technology
Unit, Research & Technology
Division of PETRONAS. His last
position was as Head of Technical
Services at PETRONAS Ammonia
in Terengganu, Malaysia. Zaman
graduated with a Bachelor of
Engineering degree in Electrical and
Electronics from Imperial College,
London, United Kingdom. Apart
from English and Bahasa Malaysia,
Zaman also speaks German.
Captain Adrian Jenkins
Regional Head – Flight Operations
Captain Adrian joined AirAsia in
1996, when the airline was under
HICOM Holdings Berhad. Prior to
his appointment as Regional Head
for Flight Operations in September
2006, he served AirAsia in various
positions including as an Instructor
and Company Check Airman,
Assistant Chief Pilot – Training and
His team established the AirAsia
Thailand aircraft operating
certi?cate as well as reactivating
AirAsia Indonesia’s aircraft
operating certi?cate and revitalising
the business unit. He has over 30
years of experience in the airline
industry. He is a licensed pilot for
multiple types of aircraft, a training
Captain, an authorised examiner,
and has also served as ?ight
operations manager.
Dato’ Abdul Nasser Abu Kassim
Regional Head – Government &
Middle East Business Development
Dato’ Nasser served as Regional
Director, In-?ight Services, Charter
and Cargo for AirAsia before focusing
his efforts on the large business
as Regional Head of Cargo on the
cargo business unit. Appointed to
his current position in July 2009,
his portfolio includes business
development for the government
and the Middle East. His prior
appointments at AirAsia include
that of Country Director of AirAsia
Indonesia and Executive Director,
Business Development managing
AirAsia’s Haj operations, cargo,
charter and in-?ight services. Dato’
Nasser had an illustrious 18-year
career at Warner Music Malaysia
Sdn. Bhd. where he held various key
positions. As one of the pioneers
in the Malaysian music industry,
he managed some of the biggest
selling artists in Malaysia and was
responsible for marketing these
talents across Asia.
Standards and Assistant Chief Pilot
– Operations. He also helped in
the setting up of AirAsia Thailand’s
?ight operations and pilot training.
His current portfolio includes
operations, training standard, ?ight
crew and network management.
Azhari bin Mohd Dahlan
Regional Head – Engineering
Azhari joined AirAsia in 2004,
overseeing the Group’s airline
engineering functions in Malaysia,
Indonesia, Thailand and the new
regional joint venture Airlines.
Prior to that, Azhari was Manager,
Planning and Logistics for AirAsia
Berhad. His current Regional
portfolio includes Maintenance
and Engineering Technical
Services, Contract and Warranty,
Quality Assurance, Projects Unit,
Data Management, Engineering
Purchasing and Logistics
Departments. Azhari is a Licensed
Aircraft Engineer.
Captain Chin Nyok San
Regional Head – Business
Development
Captain Chin Nyok San was one
of the pioneers of AirAsia, then
under HICOM Holdings Berhad.
Captain Chin has been the Head
of Business Development since
January 2005. His current portfolio
includes joint venture and business
development.
Ashok Kumar
Regional Head – Strategy, Airport
and Planning
Ashok Kumar has been Regional
Head of Strategy, Airport and
Planning of AirAsia since January
2005. Prior to that, Ashok was
Regional Director, Government and
Business Relations. His current
portfolio includes negotiating
airport charges; developing,
scheduling and planning of routes;
?eet management and obtaining
regulatory approvals; coordination
of AirAsia’s infrastructure
developments and coordination with
relevant authorities on the Group’s
needs for airport infrastructure.
He has had more than 40 years
experience in the airline industry,
having worked at Malaysia-
Singapore Airlines as Management
Trainee/Marketing Executive from
1970 to 1972 and Malaysia Airlines
from 1972 to 2003, where he held
various key positions, including
Assistant General Manager,
Operations Planning, before joining
the Company in 2003 as Senior
Manager, Commercial Planning and
Strategy. Ashok received a Bachelor
of Applied Economics (Hons) degree
from the University of Malaya in
1970.
From left to right: Ashok Kumar, Captain Chin Nyok San, Dato’ Abdul Nasser Abu Kassim, Captain Adrian Jenkins, Azhari bin Mohd Dahlan, Kamarulzaman bin Ahmad
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
50
SENIOR MANAGEMENT
Lau Kin Choy
Regional Head – Innovation,
Commercial & Technology
Lau Kin Choy has been Regional
Head of Innovation, Commercial
and Technology since 2009.
From 2004 to 2008, he was the
Regional Head of Information
Technology & E-Commerce and
prior to that the Chief Information
Of?cer from August 2002. His
current portfolio includes airline
system, IT operations, intranet,
networking, data relationship
management, business intelligence,
new media and payment channel.
Prior to joining the Company, Lau
was the General Manager of WEB
Distribution Services Sdn. Bhd., a
joint venture music distribution and
logistic center for Warner Music,
EMI Malaysia and BMG Music, from
1998 to 2002. Lau was a ?nalist
for Pikom’s 2006 CIO Recognition
Award.
Evelyn Koh
Regional Head of Legal –
Commercial and Compliance
Evelyn came on board AirAsia as
General Counsel at the end of
2006. Her legal career spans over
22 years of legal practice including
acting as in-house Legal Counsel for
Carlsberg, Channel 9 and Uniphone
Telecommunciations, where
she also served all companies
within the Sapura Group. Her
experience covers a diversity of
businesses and industries which
include manufacturing, property
investment, telecommunications, IT,
education, automotive, broadcast
and multimedia. Evelyn holds an
LL.B (External), from the University
of London, UK and is currently the
Regional Head - Legal, Commercial
& Compliance of AirAsia Berhad.
Amir Faezal bin Zakaria
Regional Head of Legal – Financial
& Strategic Services and
Operations
Amir has a wide range of legal
experience in areas of commercial
laws, corporate ?nance, banking and
transport. Prior to joining AirAsia,
Amir had 13 years of experience
as a legal practitioner in a number
of Malaysian legal ?rms including
Rashid & Lee (now Shahrizat Rashid
& Lee) and Zaid Ibrahim where he
specialised in corporate law, banking
and ?nance as well as infrastructure
projects. His current portfolio is to
provide legal support to the group
for aircraft ?nancing, leases, joint
ventures, engineering contracts
as well as contracts relating to
operations. He also manages
litigation matters for the group.
Amir graduated with LLB (Hons)
from Leeds Metropolitan University,
is a member of the Honourable
Society of Lincoln’s Inn since 1992
and was called to the Malaysian Bar
in 1993.
Adzhar Ibrahim
Regional Head – People
Adzhar has 29 years of working
experience in human resources/
people function, 24 of which at
head level, in various companies
involved in many sectors, such
as semiconductor, healthcare,
telecommunications, banking and
a huge local conglomerate. He also
has many experiences in start-
ups, and was part of the start-up
management team for Baxter
Healthcare (Malaysian Operations)
and Maxis. Prior to joining AirAsia
as Regional Head People in
January 2010, he was with DiGi
Telecommunications Sdn. Bhd. His
current portfolio are rewards and
people services, industrial relations
and compliance, corporate culture,
resourcing and talent management,
training and staf?ng.
V. Raman Narayanan
Regional Head – ASEAN Affairs
Raman joined AirAsia as Regional
Head, Communications in 2009.
An award-winning journalist, he
began his career with The New
Straits Times in 1973 before
moving to The Star in 1977. He
was named “Reporter of the Year”
in the inaugural Malaysian Press
Institute’s awards in 1982. In 1988,
he left for the United States, joining
The Atlanta-Journal Constitution,
where he served as Opinion Page
Editor. During his tenure, the AJC
won several national awards for
the section. In 1999, he became
an editor at CNN International. In
2002, he moved back to the AJC
as International Editor. He returned
to Malaysia in 2007, serving as a
media consultant to AirAsia before
joing the airline full-time. In late
2010, Raman moved to the Group
CEO’s Of?ce to assume the newly
created position of Regional Head,
ASEAN Affairs.
From left to right: Adzhar Ibrahim, Amir Faezal bin Zakaria, Evelyn Koh, Lau Kin Choy, V. Raman Narayanan
PAGE >
51
AIRASIA BERHAD
ANNUAL REPORT
2010
THAILAND
FROM LEFT TO RIGHT
Pornanan Gerdpraset – Chief Financial Controller
Bovornovadep Devakula – Director – Business Development
Preechaya Rasametanin – Director – Engineering
Tanapat Ngamplang – Director – Operations
Santisuk Klongchaiya – Director – Commercial
PAGE >
52
AIRASIA BERHAD
ANNUAL REPORT
2010
SENIOR MANAGEMENT
INDONESIA
FROM LEFT TO RIGHT
Soeratman Doerachman – Advisor to Chief Executive Of?cer
H. Jafrie Arief – Director – Strategy, Airport & Planning
Perbowoadi – Director – Maintenance & Engineering
Widijastoro Nugroho – Director – Commercial
Capt. Poedjiono – Director – Flight Operations
Capt. Sonny Sasono – Director – Safety and Security
PAGE >
53
AIRASIA BERHAD
ANNUAL REPORT
2010
“ The cabin crew made a
very out-of-the-ordinary
announcement: ‘Ladies
& Gentlemen, for your
information, AirAsia is all
about making everyone’s
dream come true. Today,
AirAsia is going to make
someone’s dream come
true.’ I then proposed to
my future wife. ”
A high-flying
proposal
Mr Lau Wei Lian
Kuching, Sarawak
now everyone can fy
BLACK YELLOW MAGENTA CYAN
Ngan G5-45 C8A61427MAY11
Citi2743 AReport_280x220mm OL_X4
9MAY’2011_5:30pm
CHAIRMAN’S
STATEMENT
WHAT IS TRULY HEARTENING IS THAT WHILE WE STAY TRUE TO OUR
BUSINESS MODEL OF KEEPING COSTS LOW, WE HAVE NOT DETRACTED
FROM PROVIDING THE HIGH-QUALITY SERVICE THAT WE PROMISE OUR
GUESTS – AS EXEMPLIFIED BY OUR WINNING THE WORLD’S BEST LOW
COST AIRLINE AWARD FOR THE SECOND YEAR IN A ROW.
DATO’ ABDUL AZIZ BIN ABU BAKAR
Chairman
PAGE >
58
AIRASIA BERHAD
ANNUAL REPORT
2010
Why do I say so? Just three statistics, among many, should suf?ce:
In 2010, just under nine years since we re-launched as a low-cost
carrier, AirAsia ?ew our 100 millionth guest. That’s 100 million people
who may not have taken to the skies if not for our low fares, our
route connectivity and our determination to ful?l our “Now Everyone
Can Fly” promise. In 2010, also, AirAsia recorded pro?ts of more
than RM1 billion. Let me repeat that: RM1 BILLION. We made a
higher pro?t than many corporations that have been listed on Bursa
Malaysia for much, much longer than we have. For our shareholders,
the year is historic as it’s the ?rst time the company is paying
out dividends, of 3 sen per ordinary share of RM0.10. This is an
additional re?ection of the company’s strong ?nancial performance.
I could go on about these achievements, but words are super?uous
when the facts speak for themselves.
Of course, it has not always been smooth cruising. We have hit
several turbulent patches along the way. Yet, with the commitment of
our people, and their ability to innovate, we have always been able to
overcome the challenges thrown our way. It is not without reason that
we call members of the simply amazing AirAsia family our Allstars.
DEAR FRIENDS,
IN MY STATEMENT IN THE 2009 ANNUAL REPORT, I
CONCLUDED WITH THESE REMARKS: “…I PLEDGE THAT
THERE WILL BE NO COMPLACENCY IN OUR FOCUS ON
ALWAYS EXCEEDING THE EXPECTATIONS OF OUR GUESTS
AND OUR STAKEHOLDERS.”
IT IS WITH GREAT PRIDE AND IMMENSE SATISFACTION THAT I
CAN SAY TODAY THAT WE HAVE KEPT OUR WORD. FOR 2010
WAS A STELLAR YEAR FOR THE GROUP – ONE THAT SAW THE
TINY AND LOSS-MAKING CONCERN THAT WAS AIRASIA WHEN
WE TOOK OVER IN DECEMBER 2001 ESTABLISH ITSELF
AS THE UNDOUBTED FAVOURITE OF THE PEOPLE AND A
MEMBER OF A VERY SPECIAL CORPORATE CIRCLE.
CHAIRMAN’S STATEMENT
PAGE >
59
AIRASIA BERHAD
ANNUAL REPORT
2010
What is truly heartening is
that while we stay true to our
business model of keeping costs
low, we have not detracted from
providing the high-quality service
that we promise our guests – as
exempli?ed by our winning the
World’s Best Low Cost Airline
award for the second year in a
row. The award is presented by
the respected London aviation
consultancy Skytrax, based on
the votes of nearly 18 million air
travellers worldwide. It proves
that our guests truly enjoy
travelling with us. Part of that, I
believe, comes from the fact that
we consistently seek to make
their travel experience hassle-
free through the creative use of
technology. We are constantly
improving on our IT systems to
make travel as convenient and
pleasant as possible. In 2010,
we introduced the concept of
self check-in as well as check-
in through the web, kiosk and
mobile. We also revamped our
reservation system to increase
its capacity and make it more
ef?cient for guests’ booking and
travel planning purposes.
Other than innovative IT, we also
offer our guests an exceptional
level of service. Our Allstars are
?red with a passion that’s hard to
?nd in any other organisation. We
continuously receive comments,
either via email or our live chat,
webmail or Twitter, on how
our people have gone beyond
the call of duty to iron out a
problem. The social media
is, in fact, a great channel
through which we are able to
obtain candid feedback from
our guests; and here again
we have proven to be beyond
compare among our peers. We
have more fans following us on
Facebook than any other airline
or transport company in the
region for that matter.
There’s yet another reason
why 2010 was a year to cheer.
In 2010, we established a
partnership to set up a venture
in the Philippines – further
expanding our network in
ASEAN and enabling us to
better serve this region many
of us call home. We believe
the potential is enormous for
our latest af?liate. At the same
time, we added several new
routes connecting the ASEAN
region with the wider global
community. We have grown
organically from a Malaysian to
an ASEAN airline with 10 hubs
in three countries in 2010,
adding two more hubs in 2011.
We have 132 routes – our
“sky bridges” -- that closely
link the diverse communities
and cultures of this 600
million-strong region. Based
on the simple premise of
FACTS AT A GLANCE
>
No. of Passengers
25.7
million for the group
democratising air travel, we have
helped promote local, regional
and international tourism that
has served to boost revenues in
ASEAN. AirAsia has brought in
more visitors to Malaysia than
any other airline, and now we
are doing the same for other
countries in the region. Our route
connectivity and fight frequency,
coupled with our low fares, also
serve as catalysts for economic
growth in other industries, hence
helping develop local economies.
I would like to take this
opportunity to thank our more
than 100 million guests for
placing their faith in AirAsia
and choosing us as their airline
of choice. Let me assure you
that your safety and comfort
are always our top priority. I
would also like to express deep
appreciation to my fellow Board
members for their contributions.
A heartfelt thank you as well
to our hard-working, creative
and passionate team of AirAsia
Allstars, under the exemplary
leadership of Group CEO
Dato’ Sri Dr. Tony Fernandes
and Deputy Group CEO Dato’
Kamarudin Meranun. We are who
we are today because of your
commitment and your dedication.
As we near the end of our ?rst
decade and prepare to enter
the next decade as a low-cost
carrier, I’m con?dent that we
are very well positioned to face
the challenges ahead. Let me
conclude, once again, with
a pledge from our Board of
Directors and the management:
AirAsia will continue to do
our utmost to exceed the
expectations of all our guests
and stakeholders.
Dato’ Abdul Aziz bin Abu Bakar
Non-Executive Chairman
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
60
AIRASIA HAS BROUGHT IN MORE VISITORS TO MALAYSIA
THAN ANY OTHER AIRLINE, AND NOW WE ARE DOING
THE SAME FOR OTHER COUNTRIES IN THE REGION. OUR
ROUTE CONNECTIVITY AND FLIGHT FREQUENCY, COUPLED
WITH OUR LOW FARES, ALSO SERVE AS CATALYSTS FOR
ECONOMIC GROWTH IN OTHER INDUSTRIES, HENCE
HELPING DEVELOP LOCAL ECONOMIES.
CHAIRMAN’S STATEMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
61
“ I’m so happy to be the
100 millionth guest to fy
AirAsia! Now Dato’ Sri Dr.
Tony Fernandes has even
given me 100 fights for
the next 100 years! This
is truly wonderful as I
fy frequently to India to
visit my husband who is
working there. ”
Our 100
millionth
guest
Irma Dewi
Indonesia
now everyone can fy
GROUP CEO’S
REPORT
IN 2002, OUR FIRST YEAR OF OPERATION AS AN LCC, WE FLEW
SOME 250,000 GUESTS. WE REACHED THE 50 MILLION MARK
IN 2008. JUST TWO YEARS LATER, WE DOUBLED THE FIGURE
TO 100 MILLION. THAT, IN A NUTSHELL, ENCAPSULATES OUR
PHENOMENAL GROWTH THIS LAST YEAR.
PAGE >
64
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP CEO’S REPORT
WHAT MAKES THE ACHIEVEMENT EVEN
MORE SATISFYING IS THAT OUR FINANCIAL
PERFORMANCE IS KEEPING PACE WITH OUR
AIRLINE’S GROWTH TRAJECTORY.... WE MADE
A PROFIT OF MORE THAN RM1 BILLION IN
2010, THEREBY JOINING AN EXCLUSIVE CLUB
IN THE CORPORATE WORLD.
DATO’ SRI DR. TONY FERNANDES
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
65
October 2010 will always have
a special place in the hearts of
all AirAsia Allstars. That month,
we got to meet Irma Dewi from
Jakarta. What’s so special
about Irma Dewi? Well, she
just happened to be the 100
millionth guest ferried by AirAsia
since we relaunched the airline
as a low-cost carrier (LCC) in
January 2002. Mull on that a
moment: in just under a decade,
our once little airline has carried
more than 100 million guests
– that’s three and a half times
the population of Malaysia, and
a sixth the entire population of
ASEAN. It’s 100 million people
who may not have taken to the
air if not for our low fares, the
connectivity of our routes and
the ease of travel we offer as
part of our high-quality service.
The low fares are self-
explanatory. But AirAsia’s
connectivity is fast becoming
our signature trademark – going
boldly where other airlines
rarely, if ever, venture. Irma
demonstrates this perfectly. She
lives in Jakarta, her husband
works in Tiruchirappalli (Trichy)
in India. No ASEAN airline ?ew
to Trichy until we decided to do
so from Kuala Lumpur. With our
low fare, we provided Irma the
opportunity to spend quality
time with her husband, ?ying
from Jakarta to Kuala Lumpur
on one of our many ?ights
between the two ASEAN capitals
and connecting to Trichy.
Thinking back, it almost seems
surreal what we’ve achieved. In
2002, our ?rst year of operation
as an LCC, we ?ew some
250,000 guests. We reached
the 50 million mark in 2008.
Just two years later, we doubled
the ?gure to 100 million. That,
in a nutshell, encapsulates our
phenomenal growth this last
year.
What makes the achievement
even more satisfying is that
our ?nancial performance is
keeping pace with our airline’s
growth trajectory. As outlined in
detail below, we made a pro?t of
more than RM1 billion in 2010,
thereby joining an exclusive club
in the corporate world. AirAsia
was a loss-making concern
owned by a government-linked
company when we took it over
in December 2001. Now, in
just under a decade, we’re a
company that made RM1 billion
in 2010. Again, take a moment
to savour that fact.
Our growth has been possible
because we are single-minded
in our pursuit of the short-haul,
point-to-point, high-turnaround
model that allows us to keep
costs low while pushing the
boundaries of ef?ciency and
productivity. Because of our
determination not to stray
from this course, we made the
strategic decision in 2010 to
let our sister airline AirAsia X,
which has grown its own very
successful model for long-haul
travel, leave the nest. While we
will still share the same website
and branding, and feed off each
other’s routes for the bene?t of
our guests, AirAsia X will operate
its own ?eet, with its own crew,
under its own management
who are now based in their own
corporate premises.
AirAsia continues to hold the
distinction of having the lowest-
cost operations in the world,
enabling us to offer our guests
the lowest fares. Our emphasis
on keeping costs low does
not, however, detract from our
commitment to the highest
levels of safety and service. We
have an excellent safety record
and an on-time performance
that’s improved signi?cantly
since we began converting our
FACTS AT A GLANCE
>
No. of Aircraft
90
>
No. of Airbus A320s
86
A MAJOR CONTRIBUTOR TOWARDS
THE GROUP’S SIGNIFICANT INCREASE IN
THE BOTTOM LINE WAS THE CONVERSION
OF THE FLEETS IN THAILAND AND
INDONESIA FROM BOEING B737 TO THE
MORE FUEL-EFFICIENT AIRBUS A320.
Boeing B737 ?eet to Airbus
A320s. Incidentally, our ?eet of
90 aircraft is the largest among
LCCs in Asia and second largest
among all ASEAN carriers,
behind only Singapore Airlines.
What’s more, we’re not just the
best airline for people looking
at affordable air travel; we’re
also one of the best airlines to
invest in.
To think we’ve come this far
in the relatively short space
of nine years is, to be honest,
something that’s dif?cult for
me to put into words. As I’ve
emphasised in all our previous
annual reports, we would not
be where we are today if not
for the outstanding group of
people who make AirAsia work.
Our more than 8,000 Allstars
have proven time and again that
with determination, passion,
creativity and courage, we can
achieve anything. Our dream
has always been to serve the
underserved. Our 100 millionth
guest proves we’ve achieved
that. Now, truly, everyone can ?y.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
66
AIRASIA’S REVENUE INCREASED FROM
RM3.13 BILLION IN 2009 TO RM3.95
BILLION IN 2010. OUR PROFIT BEFORE TAX
(PBT) RECORDED A 77% GROWTH FROM
RM622.23 MILLION TO RM1.10 BILLION.
THESE RESULTS ARE ALL THE MORE
MEANINGFUL GIVEN THAT THE PRICE OF
OIL AVERAGED US$91.8 PER BARREL IN
2010 AS COMPARED TO US$70.4 PER
BARREL IN 2009, AND WE HAD GROWN
OUR FLEET FROM 84 TO 90 AIRCRAFT.
GROUP CEO’S REPORT
PAGE >
67
AIRASIA BERHAD
ANNUAL REPORT
2010
OUR MORE THAN 8,000 ALLSTARS HAVE PROVEN TIME AND AGAIN THAT WITH DETERMINATION,
PASSION, CREATIVITY AND COURAGE, WE CAN ACHIEVE ANYTHING. OUR DREAM HAS ALWAYS BEEN
TO SERVE THE UNDERSERVED. OUR 100 MILLIONTH GUEST PROVES WE’VE ACHIEVED THAT. NOW,
TRULY, EVERYONE CAN FLY.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
68
GROUP CEO’S REPORT
FINANCIAL PERFORMANCE
After two painful years experienced
by the aviation industry, the
recovering economy in 2010
revived ?agging performances
in general. Thanks to our strong
fundamentals and unique
business model, we were very well
positioned to take advantage of
the economic turnaround, allowing
us to really soar.
AirAsia’s revenue increased from
RM3.13 billion in 2009 to RM3.95
billion in 2010. Our pro?t before
tax (PBT) recorded a 77% growth
from RM622.23 million to RM1.10
billion. These results are all the
more meaningful given that the
price of oil averaged US$91.8 per
barrel in 2010 as compared to
US$70.4 per barrel in 2009, and
we had grown our ?eet from 84 to
90 aircraft.
The ?eet conversion in Thailand
and Indonesia from Boeing B737s
to the more fuel-ef?cient Airbus
A320s contributed towards our
pro?ts. It also meant the two
operations turned pro?table for
the ?rst time. We celebrated
AirAsia Thailand’s full conversion
in November 2010, and hope to
do the same for our Indonesian
af?liate by 2012, upon completion
of the runway upgrade in Bandung.
As of end 2010, AirAsia Indonesia
had four remaining Boeing B737s.
AirAsia’s performance was also
boosted by increased revenue
from our ancillary services.
We managed to increase the
average spend per guest with an
expanded range of services and
enhanced product offerings. Cargo
and courier services also grew
substantially, posting a revenue
of RM121.35 million in 2010 as
compared to RM79.79 million in
2009. I am also pleased to see
a stronger take-up in our in?ight
meals and beverage, which
defnes the quality of products
that we provide. As most of
the ancillary initiatives come
at minimal cost, the revenue
generated could easily be passed
through to our bottom line.
In terms of our ?nancial
fundamentals, 2010 was notable
in that the Group managed to
decrease our gearing from 2.61
times in 2009 to 1.74 times,
further endearing us in the eyes
of analysts. At the same time,
our Thai and Indonesian af?liates
continued to repay the amount
due to AirAsia, reducing by more
than half their combined debt from
RM823 million to RM376 million.
HIGHLIGHTS OF THE YEAR
Internally, in 2010, we improved
on the design of our booking
system to make it more
convenient for use of guests.
New Skies, as the state-of-the-
art navigation system is called,
literally takes our reservation
capabilities to new heights.
It is able to cope with up to
a million online reservations
a day and allows passengers
to search for the lowest fare
available for their trips, while
also enabling them to book
seats for multi-cities in one
transaction. Operational savings
accrued from this system will
be passed on to guests in
terms of attractive promotions
and discounts. What is most
impressive about New Skies is
>
No. of Hubs
10
in 3 countries
(2 added in 2011)
>
No. of Routes
132
the time it took to implement.
Working round the clock, and
with an uncommon zeal so
typical of AirAsia, our Allstars
managed to get the system up
and going within nine months. In
other major airlines, I’m told, the
same process would have taken
18 to 24 months. Once again,
kudos to our Allstars.
The system upgrade paid
almost immediate dividends.
A month after New Skies was
operational, we launched a
Mind Blowing Fare campaign,
offering international and
domestic ?ights for only RM1.
During the previous free ticket
campaign, in November 2009,
we achieved record sales of
390,000 bookings on the ?rst
day, but also had to contend
with the system repeatedly
crashing. This time, we sold
538,000 tickets the ?rst day of
the campaign. And the system
didn’t register even a blip. We
also set a new record of 36,871
seats sold in an hour, 47.5%
more than the previous one-hour
sales record of 25,000 seats.
Further improving the customer
experience, we introduced self
check-in kiosks at some of our
airports, as well as the ability to
check in via the web or internet-
enabled mobile phones to
minimise the hassle of queuing
at check-in counters. We also
expanded our menu so that it
now offers healthier options
including vegetarian meals,
taking into account the cultural
and religious mores of the
diverse Asian communities.
PAGE >
69
AIRASIA BERHAD
ANNUAL REPORT
2010
MAINSTREAMING OUR
ANCILLARY INCOME
Ancillary income is important to
AirAsia as it acts as a natural
hedge against ?uctuations
in the price of oil. Every RM1
spent by a guest on ancillary
items effectively acts as a
buffer against a US$1 per barrel
increase in the price of oil.
Needless to say, the more guests
we carry, and the more they
spend, the higher our ancillary
income. Every year, we have
managed to carry an increasing
number of guests, as re?ected in
our passenger load. In 2010, the
Group’s combined passenger load
increased to 78% from 75% in
2009, or to 25.68 million guests
from 22.70 million guests. Every
year, also, we have managed to
increase the amount each guest
spends on items like excess
baggage, picking their seat, food
and beverage on ?ights and travel
insurance. In 2010, ancillary
income per guest increased to
RM44.
In true AirAsia style, we have
been very strategic in developing
our ancillary initiatives, making
as much use as possible
of our existing IT or aircraft
infrastructure to ensure a steady
and signi?cant income stream
at low, or no, cost to us. For
example, in 2010, we made use
of our IT expertise to launch two
online initiatives - AirAsiaRedTix.
com and AirAsiaMegastore.com.
AirAsiaRedTix.com, which made
its debut on 8 March 2010,
provides guests and fans access
to some of the best music, sports
and entertainment events around
the world. The AirAsiaMegastore.
com, as its name implies, is an
online portal where the public can
buy AirAsia collectibles as well as
items from merchant partners,
ranging from fashion and lifestyle
products to travel paraphernalia,
computers, IT gadgets, books,
CDs and even home décor and
appliances.
We also made better use of
our aircraft belly space to
carry more cargo. We have a
natural advantage over other
cargo operators given that our
operational cost is the lowest in
the world and we can therefore
offer cheaper cargo rates. We
also fy extensively and frequently
around the region and therefore
can deliver more quickly. To
service markets we don’t as
yet cover, our enterprising team
formed agreements with other
airlines. As a result of these
initiatives, our cargo services
grew signi?cantly in 2010, and we
EVERY YEAR, ALSO, WE HAVE MANAGED
TO INCREASE THE AMOUNT EACH GUEST
SPENDS ON ITEMS LIKE EXCESS BAGGAGE,
PICKING THEIR SEAT, FOOD AND BEVERAGE
ON FLIGHTS AND TRAVEL INSURANCE.
IN 2010, ANCILLARY INCOME PER GUEST
INCREASED TO RM44.
were even named the Air Cargo
Industry Newcomer of the Year
2010 at the ACW World Air Cargo
Awards in Shanghai. AirAsia is the
?rst low-cost carrier to win this
award.
EXPANSION & THE ASEAN
CONNECTION
A consistent focus at AirAsia
has been to grow our network
of routes and to increase the
frequency of fights on the more
popular ones, i.e. those with
passenger loads of more than
80%. We managed to do both in
2010.
Last year, AirAsia Indonesia’s
target was to further expand
its international network.
Accordingly, it launched new
routes such as Bali-Darwin,
Medan-Kuala Lumpur, Surabaya-
Bangkok and Surabaya-Penang.
AirAsia Thailand, meanwhile,
launched a ?rst by linking two
paradise destinations, Phuket
and Bali, allowing sun-and-
sea-seekers to hop from one
beach paradise to another
on a convenient, affordable
AirAsia ?ight. Our Thai af?liate
also launched the ?rst Phuket-
Ubon Ratchatani route, and
strengthened its links with
PAGE >
70
AIRASIA BERHAD
ANNUAL REPORT
2010
NO CHARGE on cash withdrawals
when using your Maybank ATM
card at any Maybank ATM in any
of these countries.
BANKING
ACROSS
BORDERS
Singapore Philippines Indonesia Brunei Cambodia
C
M
Y
CM
MY
CY
CMY
K
MAYB002•MME Promo 28x22cm.pdf 1 5/5/11 11:33 AM
www.shlegal.com
One Raffes Place #12-00
Singapore 048616
T: + 65 6226 1600
F: + 65 6226 1661
Stephenson Harwood is proud to be associated with AirAsia - one of Asia’s leading carriers
and an important member of the frm’s international stable of clients.
As an award-winning full service international law frm, with one of the largest and most
respected Aviation practices in Asia, we advise on areas such as aviation fnance and
leasing; litigation and risk and aero-political matters.
Our skill and excellence in these areas underscore a steadfast commitment to delivering
our clients the highest quality service.
Stephenson Harwood Congratulates
on Another Year of Flying High
Aircraft Finance
Law Firm of the Year
Jane’s Transport Finance Awards 2010
Aviation Law Firm of the Year
Finance Monthly Global Awards 2011
International Law Offce
Client Choice Award 2010
for the Aviation category
AirAsia
Photo by Paul Ng on AirAsia
Contact
GROUP CEO’S REPORT
IN TOTAL, WE ADDED 18 NEW ROUTES IN
2010, MOST OF WHICH FURTHER ENRICHED
OUR INTRA-ASEAN NETWORK, THE OTHERS
CONNECTING OUR 10 ASEAN HUBS WITH
POPULAR DESTINATIONS SUCH AS HONG
KONG, TAIPEI, DARWIN AND CHINA.
India via ?ights from Bangkok
to Kolkata and Delhi. India was,
in fact, one of our hot zones
in 2010; we launched ?ve new
routes to Bangalore, Chennai
and Kolkata from Kuala Lumpur,
Penang and Bangkok, offering
a total of 134 weekly ?ights
to this emerging economic
powerhorse. India is an
attractive destination for us not
least because of its population
of over 1.1 billion, many of
whom are desirous to travel.
In total, we added 18 new
routes in 2010, most of which
further enriched our intra-ASEAN
network, the others connecting
our 10 ASEAN hubs with popular
destinations such as Hong
Kong, Taipei, Darwin and China.
In keeping with our promise
to be Truly ASEAN, AirAsia is
in the process of setting up a
new af?liate in the Philippines.
Through our fully-owned
subsidiary AA International Ltd,
we’ve formed a partnership with
a group of individuals in the
Philippines - Antonio Cojuangco
Jr., Dr. Michael Romero and
Marianne Hontiveros - to
establish a low-cost airline in
which we will own 40% equity.
We are looking forward to this
new venture, targeted to start
at end 2011, as we believe the
Philippine market is ripe for a
low-cost carrier serving both
domestic and international
routes. In fact, we believe
the ASEAN region as a whole
presents great potential for
further expansion of the AirAsia
franchise. The establishment of
more regional af?liates will be
an overarching theme to guide
our onward journey in the years
to come as we strive to serve
the 600 million-strong region we
all call home.
BRANDING OR BUILDING
LOCAL HEROES
AirAsia has successfully
increased our visibility and
built a world-renowned brand
by association with high-pro?le
sports such as football, motor
racing and basketball. In 2010,
we further strengthened our
branding initiatives by assuming
two key title sponsorships - for
the 2010 AirAsia British Grand
Prix at Silverstone and for the
ASEAN Basketball League’s
2010/2011 season. Towards the
end of the year, we signed up an
exclusive three-year sponsorship
deal with the champions of the
previous season - the Philippine
Patriots - who will act as towering
ambassadors for the AirAsia
brand.
Collaborating with the Sepang
International Circuit (SIC), we
put a Malaysian team - the Team
AirAsia-Sepang International
Circuit - in the 2010 MotoGP
World Championships. Of the
two riders, Muhammad Zulfahmi
Khairuddin is Malaysian, and
we are providing all the support
possible to develop his racing
?nesse. Our objective, in addition
to the mileage we get from these
sporting events, is to groom
local ASEAN sports heroes.
With this in mind, in 2010, we
also established the AirAsia-
Team Lotus Driver Development
Program under which we have
recruited seven young aspiring
racers from ASEAN as well as
the UK, USA and Denmark.
These racers will be given the
best training in the hope of our
uncovering some future stars.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
73
AIRASIA HAS SUCCESSFULLY INCREASED OUR
VISIBILITY AND BUILT A WORLD-RENOWNED BRAND
BY ASSOCIATION WITH HIGH-PROFILE SPORTS SUCH
AS FOOTBALL, MOTOR RACING AND BASKETBALL.
ENTER THE NEW DECADE
After a year in which the global
airline industry picked up pace
again, the forecast for 2011 in
general is good, with an element
of caution. The global economy
is anticipated to continue to
improve; however political
uncertainties in the Middle East,
and the concomitant increase in
oil price, could put a damper on
the industry. IATA expects rising
oil prices to offset the increase
in demand for air travel, halving
global airline net pro?ts to
1.4% as compared to 2.9%
in 2010. In addition, airlines
face the possibility, as always,
of weakened demand for air
travel in the event of any natural
disasters.
At AirAsia, we have always
demonstrated a capability to
cope successfully with any
challenge that comes our way.
We do not whinge and moan
about the externalities we
cannot control; instead, we
focus on improving ourselves
from within so as to transcend
the perils of the moment and
emerge stronger. Hence, we
are closely monitoring the
volatility in oil prices, but
we are also taking proactive
measures that minimise the
impact on our costs (and,
thus, our low fares for guests).
We were the ?rst airline to
remove the fuel surcharge in
November 2008, and even
while others maintained, or
even increased, this surcharge
with rising oil prices, we were
loath to follow suit. Reluctantly,
however, we acknowledge that
it would be irresponsible in our
management of the company
if we continue to avoid doing
so. Thus, we have re-imposed
the fuel surcharge, but on a
graduated scale depending
on the length of the ?ight and
in a manner that still helps to
keep our fares lower than other
airlines.
We have been through so many
turbulent phases in the past
that we now have a stress-
tested senior management
team in place – one that is
exceptionally capable of leading
our Allstars in overcoming
the challenges we face.
Every stormy period we have
survived has strengthened the
foundation on which we are
built and will serve us well in
our management of AirAsia.
lndeed, we are con?dent enough
of our fundamentals that we
are going ahead with plans to
acquire eight new aircraft in
2011, the ?nancing for which
has already been secured. If
anything, we look forward to
further expansion into ASEAN,
aided by further liberalisation of
regional routes under the ASEAN
Open Skies Agreement. In short,
we are optimists here at AirAsia
– but it’s an optimism tempered
by reality.
As always, I thank our Allstars
for their dedication, hard work
and enthusiasm, which have
kept the AirAsia ?ag, and planes,
?ying. We have over 8,000
creative minds from all over
ASEAN and beyond working with
us, inspiring the management
with fresh ideas and challenging
us continuously to reinvent
ourselves. To our Allstars, a
heartfelt thank you for all that
you do. I would also like to
thank our Board of Directors,
and especially our Chairman, for
continued guidance and wisdom.
And, of course, a heartfelt
thanks to our shareholders,
our suppliers and all our other
stakeholders for their support.
I believe we have built a
phenomenal brand here
together with the whole Allstar
team in our ?rst decade of
operations. Having laid such a
solid foundation, we are quietly
con?dent of the potential and
possibilities of the Group in
our next decade of operations,
which I am truly excited to be a
part of.
GROUP CEO’S REPORT
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
75
We received accolades for being the largest low-cost
airline operating into Changi. In fact, Singapore’s Changi
Airport serves as a major virtual hub for AirAsia Group’s
fights to destinations in Malaysia, Thailand and Indonesia.
Merlion Park, Singapore
Thailand
N.Korea
Bangladesh
India
Sri Lanka
Indonesia
Philippines
Cambodia
Laos
Vietnam
Pakistan
Myanmar
Ireland
London
Tehran
Bali
Yogyakarta
Balikpapan
Solo
Jakarta
Padang
Pekanbaru
Medan
Hat Yai
Narathiwat
Phuket
Ho Chi Minh
Phnom Penh
Siem Reap
Vientiane
Hanoi
Dhaka
Macau
Hong Kong
Shenzhen
Guangzhou
Guilin
Hangzhou
Shanghai
Chengdu
Tianjin
Seoul
Beijing
Tiruchirappalli
Bangalore
Mumbai
New Delhi
Sandakan
Tawau
Miri
Sibu
Kota Bharu
Alor Setar
Bandung
Surabaya
Yangon
Kochi
Kolkata
Chennai
Taipei
Kota Kinabalu
Labuan
Singapore
Johor Bahru
Kuching
Brunei
Bintulu
Palembang
Taiwan
Colombo
Banda Aceh
Iran
Uzbekistan
Afghanistan
Malaysia
Langkawi
K.Terengganu
Krabi
France
Spain
Italy
Germany
United
Kingdom
Ireland
London
Paris
Gold Coast
Perth
New Zealand
Australia
New
Zealand
Tokyo
Melbourne
Christchurch
Makassar
Chiang Mai
Chiang Rai
Penang
S.Korea
Afghanistan
China
Bhutan
Nepal
Mongolia
Iran
Indian Ocean
Japan
Clark
AIRASIA
LEGEND
AIRASIA X
Hub
Darwin
Bangkok
Lumpur
Kuala
CONNECTING
ASEAN AND
BEYOND
PAGE >
78
Thailand
N.Korea
Bangladesh
India
Sri Lanka
Indonesia
Philippines
Cambodia
Laos
Vietnam
Pakistan
Myanmar
Ireland
London
Tehran
Bali
Yogyakarta
Balikpapan
Solo
Jakarta
Padang
Pekanbaru
Medan
Hat Yai
Narathiwat
Phuket
Ho Chi Minh
Phnom Penh
Siem Reap
Vientiane
Hanoi
Dhaka
Macau
Hong Kong
Shenzhen
Guangzhou
Guilin
Hangzhou
Shanghai
Chengdu
Tianjin
Seoul
Beijing
Tiruchirappalli
Bangalore
Mumbai
New Delhi
Sandakan
Tawau
Miri
Sibu
Kota Bharu
Alor Setar
Bandung
Surabaya
Yangon
Kochi
Kolkata
Chennai
Taipei
Kota Kinabalu
Labuan
Singapore
Johor Bahru
Kuching
Brunei
Bintulu
Palembang
Taiwan
Colombo
Banda Aceh
Iran
Uzbekistan
Afghanistan
Malaysia
Langkawi
K.Terengganu
Krabi
France
Spain
Italy
Germany
United
Kingdom
Ireland
London
Paris
Gold Coast
Perth
New Zealand
Australia
New
Zealand
Tokyo
Melbourne
Christchurch
Makassar
Chiang Mai
Chiang Rai
Penang
S.Korea
Afghanistan
China
Bhutan
Nepal
Mongolia
Iran
Indian Ocean
Japan
Clark
AIRASIA
LEGEND
AIRASIA X
Hub
Darwin
Bangkok
Lumpur
Kuala
AirAsia is not only the world’s best low-cost
airline, it is also the world’s only truly ASEAN
(Association of Southeast Asian Nations)
airline. No other carrier - either low-cost or
legacy - offers the kind of connectivity in
ASEAN that we do, opening up avenues for
the region’s 600 million people, and linking
them in ways that were not possible before.
NOW EVERYONE
CAN FLY TO MORE THAN
65 DESTINATIONS
ACROSS 3 CONTINENTS
No. of Routes Served by AirAsia Group and AirAsia X
2003 11
2004 26
2005 52
2006 65
2007 75
1
2008 108
4
2009 126
9
2010 132
13
AirAsia Group AirAsia X
2003
7 13
4
6
10
12
17
20
2
6
8
14
16
1
3
8
19 26 34 44 48
2004
Malaysia Thailand Indonesia AirAsia X
2005 2006 2007 2008 2009 2010
Total Now
11
19
18
53
Number of Aircraft for AirAsia Group and AirAsia X
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
79
We have built what we call
sky bridges, connecting
communities from each of the
10 ASEAN nations, namely
Malaysia, Thailand, Indonesia,
Vietnam, the Philippines, Laos,
Cambodia, Myanmar, Brunei
and Singapore. Among these
sky bridges are some that are
unique to AirAsia, creating
new connections and opening
new possibilities for local
communities.
Of the 25.7 million guests ?own
in 2010, close to 65% were
from ASEAN. It comes as little
surprise that our 100 millionth
guest, whom we celebrated in
October 2010, was a young lady
from the region. Irma Dewi is
Indonesian.
AirAsia is the only airline with
hubs in three countries, all in
ASEAN. We have operational
bases in Kuala Lumpur, Kuching,
Penang and Kota Kinabalu in
Malaysia; Bangkok and Phuket
in Thailand; and Jakarta, Bali,
Bandung and Surabaya in
Indonesia. In 2011, we have
added Chiang Mai and Medan
as new hubs in Thailand and
Indonesia, respectively, and will
be opening a new hub in Clark,
the Philippines, towards year
end.
Singapore, meanwhile, has
grown into a virtual hub in just
two years since we were given
the rights to ?y to the island
republic in 2008, following the
ASEAN Open Skies agreement.
Previously served out of
Bangkok by AirAsia Thailand,
Singapore is now connected to
four destinations in Indonesia,
six in Malaysia and three in
Thailand. The AirAsia Group
is the largest low-cost carrier
operating in Singapore in
terms of fight frequency,
with more than 203 ?ights a
week departing from Changi
Airport. AirAsia’s contribution to
passenger traf?c at Changi was
recognised when it was named
one of the top airlines in the
passenger carriage category by
the Changi Airport Group.
Why ASEAN? Quite simply,
because it’s our home. And it’s
a home base that offers huge
potential in terms of growth.
The region comprises one of the
fastest growing middle-income
populations in the world, with
a combined GDP of US$1.5
trillion. It is also a region ripe for
air travel given that most of the
countries are separated by vast
bodies of water.
While AirAsia promotes intra-
ASEAN travel like no other
airline, we are also connecting
the region and its people to
the rest of the world. In 2010,
PAGE >
80
AIRASIA BERHAD
ANNUAL REPORT
2010
AirAsia added 23 new routes,
both within ASEAN as well as
between ASEAN and key cities in
the Asia Paci?c. In the process,
we are promoting tourism and
trade and helping develop local
economies in other ways.
The setting up of af?liates in
Thailand in 2003 and Indonesia
in 2004 provided a veritable
boost to the local economies of
these countries.
AirAsia’s various sports
sponsorships reinforce our
branding as an ASEAN airline,
while promoting regional
sporting events and contributing
to the development of local
sports heroes. We have
promoted Asians in the MotoGP,
in basketball and in Formula
1 racing. We also support
the arts and culture of the
region, highlighting events in
our monthly in?ight magazine
Travel3Sixty and promoting local
artistes in any way we can. In
February 2010, we launched
the AirAsia Limited Edition Truly
ASEAN Collection of postcards,
coasters and notebooks with
distinctive designs by artists
from all 10 ASEAN countries.
Within AirAsia itself, we have
actively recruited staff from
across ASEAN. These Allstars
serve as a continuous reminder
to our guests and to us at
AirAsia that we all belong to
one huge family - that vibrant,
colourful, diverse family called
ASEAN.
PAGE >
81
AIRASIA BERHAD
ANNUAL REPORT
2010
In 2010, AirAsia Thailand increased its capacity
by taking delivery of eight new A320 aircraft
to become a full-fedged Airbus carrier with a
feet size of 19 aircraft. Which means the airline
helped over 5.7 million guests from Thailand to
reach new destinations such as India, China and
other unchartered ASEAN destinations.
Wat Arun Temple, Bangkok, Thailand
THAILAND >>
CELEBRATING
A NEW ALL-A320
FLEET
THE YEAR SAW AIRASIA THAILAND ADD SIX NEW
ROUTES TO ITS EXISTING 26, INCREASING ITS NETWORK
CONNECTIVITY TO 32 DESTINATIONS.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
84
The year 2010 was a turning
point for AirAsia Thailand. It
was the year in which the airline
completed its conversion to an
all-Airbus A320 ?eet and when
the six-year-old company turned
pro?table.
AirAsia Thailand increased its
revenue 33% to THB12.39
billion, while improved
operational ef?ciencies led
to a net pro?t of THB2.85
billion, representing growth of
452% from 2009. The results
point to superior management
and performance, especially
impressive given the political
unrest in the country as well
as devastating ?oods that
brought Thailand to a standstill
in October. AirAsia Thailand also
continued to record strong load
factors, which it attributes to
abiding by its promise to always
put its guests ?rst.
An in-depth documentary aired
on Thai TV following a media
trip to Toulouse went a long way
towards boosting the image of
AirAsia Thailand. Passengers
now equate the airline with
brand-new, quality aircraft and
realise that they are getting
real value for money by ?ying
the low-cost carrier. A total of
5.7 million guests ?ew on the
airline in 2010, marking an
increase of 14% year-on-year, and
contributing to an average load
factor of 78%, up from 76% in
2009.
>
Revenue
THB12.39bil
>
Net Pro?t
THB2.85bil
PAGE >
85
AIRASIA BERHAD
ANNUAL REPORT
2010
Greater operational ef?ciencies
derived from the ?eet conversion
led to signi?cantly fewer ?ight
delays, while the fuel-ef?cient
aircraft also reduced costs to a
considerable degree, adding to
the company’s bottom line. At
the same time, AirAsia Thailand
upgraded its online systems
to facilitate guest bookings,
and created greater passenger
convenience by introducing
self check-in kiosks as well as
web check-in facilities. These
customer-centric innovations
were supplemented by attractive
promotions. Although its
average fare increased 9%
from THB1,656 to THB1,804,
this was primarily due to more
international ?ights. Taken
as a whole, AirAsia Thailand
succeeded in keeping its fares
low. All these changes were
appreciated by guests, as
re?ected in the numbers.
In 2010, the airline enhanced
its customer relationship
management by launching the
AirAsia Thailand Facebook fan
page which enables news of
promotions and other exciting
updates to spread very quickly.
Allstars are encouraged to use
the social media to create a
stronger AirAsia brand throughout
Thailand; even CEO Tassapon
Bijleveld contributes to this via
his personal Twitter account.
The year saw AirAsia Thailand
add six new routes to its existing
26, increasing its network
connectivity to 32 destinations.
Notably, the airline has started
tapping into the Indian market
by opening routes to Kolkata
and New Delhi which proved
so popular that within two
weeks of their launch, the ?ight
frequencies were increased to
daily. The airline also created a
?rst by linking two popular ASEAN
tourist destinations, Phuket
and Bali, while adding to the
travel convenience of Thais and
visitors to Thailand by linking for
the ?rst time Phuket with Ubon
Ratchathani and by introducing
?ights between Phuket and Udon
Thani.
Having strengthened its
network and increased its
passenger load, AirAsia Thailand
managed to further increase
its market share in terms of
LCC passengers carried at
Suvarnabhumi Airport to 56%
in 2010.
Prospects
In 2011, AirAsia Thailand will
concentrate on building both
its domestic and international
networks, with a particular
focus on China. To support its
route expansion, the airline is
increasing its ?eet and is to
receive three more A320s in
2011, the ?rst of which was
delivered in January. The other
two will be delivered in the third
and fourth quarters.
At the same time, the airline
plans to build its brand via more
strategic corporate responsibility
initiatives, focusing on giving
back to society using its key
strengths in air transport and
connectivity. The airline aims
India
China
New Delhi
Kolkata
Taiwan
China
Bangladesh
Philippines
Malaysia
Laos
Vietnam
Myanmar
Indonesia
Thailand
Jakarta
Singapore
UdonThani
Hanoi
Chiang Mai
Chiang Rai
Shenzhen
Guangzhou
Yangon
Kuala
Lumpur
Kota
Kinabalu
Bangkok
Cambodia
Indian Ocean
Phuket
Hong Kong
Bali
Narathiwat
Ho Chi Minh
Phnom Penh
Krabi Nakhon Si Thammarat
Penang
Hat Yai
Macau
Ubon Ratchathani
Surat Thani
>
No. of Guests
5,704,832
>
No. of Destinations
32
>
No. of Hubs
2
(1 added in 2011)
to connect people, goods,
knowledge and aid supplies
when needed. It also plans to
be more actively involved in local
communities and festivities as
well as in sports and concert
sponsorships.
Tassapon Bijleveld
Chief Executive Of?cer
AirAsia Thailand
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
86
With four hubs in Indonesia and adding new destinations
in other ASEAN countries, AirAsia Indonesia is poised
to increase passenger traffc throughout the region. In
fact, by striking the right balance between domestic and
international routes, which is key to increasing yield and load
factor, the airline few close to four million guests in 2010.
Borobudur, Java, Indonesia
In 2010, AirAsia Indonesia had
a ?eet of 18 aircraft operating
out of four hubs in Jakarta,
Bali, Bandung and Surabaya.
It added a ?fth hub - Medan
- in 2011. While serving key
domestic routes, the airline has
been focusing on developing
its international network which
now reaches out to Singapore,
Malaysia, Australia and Vietnam.
As part of an aggressive
international route expansion
plan, it launched three new
international routes, Surabaya–
Bangkok, Surabaya–Penang and
Bali–Darwin, and also added one
more daily ?ight for high-yield
international routes such as
Surabaya–Kuala Lumpur, Bali–
Kuala Lumpur and Bali–Perth.
Bali has been a phenomenal
hit among Australians as it is
seen as an affordable paradise
destination for the middle class,
and this has contributed to the
four daily ?ights from Perth.
These initiatives contributed to
an increase in the number of
passengers ?own, 70% of whom
were international guests.
A positive development in
its vision to spread its wings
internationally was recognition
by the European Union of AirAsia
Indonesia’s compliance with
international safety standards
and practices. This led to the EU
of?cially lifting a ban on AirAsia
Indonesia in July 2010, and
opening the European market to
this ambitious airline.
In addition to its international
expansion, AirAsia Indonesia
connected Surabaya with Medan
and increased the frequency of
the popular Jakarta-Bali route
during weekends and the holiday
seasons.
AirAsia Indonesia recorded a
revenue of IDR2,764 billion
in 2010, up by 37% from
IDR2,016 billion achieved in
2009. Despite a hike of 15%
in average base fares, the
number of passengers carried
increased 13% year-on-year
to 3,921,039, while its load
factor rose 3 percentage points
to 77%. The airline grabbed
a 41.19% market share in
international travel, making it
the leading international airline
in the country. Ancillary income
revenue contributed signi?cantly
to the airline’s bottom line,
growing 81% year-on-year,
with an average spend per
passenger of IDR123,308. For
the full year, AirAsia Indonesia
generated IDR474.41 billion
in net pro?t, recording growth
351% year-on-year.
AS PART OF AN AGGRESSIVE INTERNATIONAL ROUTE EXPANSION PLAN, IT
LAUNCHED THREE NEW INTERNATIONAL ROUTES, SURABAYA–BANGKOK,
SURABAYA–PENANG AND BALI–DARWIN, AND ALSO ADDED ONE MORE DAILY
FLIGHT FOR HIGH-YIELD INTERNATIONAL ROUTES SUCH AS SURABAYA–
KUALA LUMPUR, BALI–KUALA LUMPUR AND BALI–PERTH.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
90
INDONESIA >>
TRULY
INTERNATIONAL
AIRLINE
>
Revenue
IDR2,764bil
>
Net Pro?t
IDR474.41bil
PAGE >
91
AIRASIA BERHAD
ANNUAL REPORT
2010
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
92
The airline focused largely
on innovation to improve its
performance. Among the
customer-centric innovations
introduced in the year were
applications that enable guests
to book their ?ights on their
smart phones as well as to self
check-in using mobile phones
or at self check-in kiosks in the
airport. AirAsia Indonesia also
connected more positively and
effectively with passengers via
the social media. In 2010, it
launched Facebook and Twitter
accounts, both of which have
proven to be very popular.
To promote both its international
and domestic routes, the airline
organised two travel fairs in
2010 - in Jakarta and Surabaya
- which attracted over 20,000
visitors and 18,000 visitors,
respectively. Motivated by the
success of these, the airline has
plans for road shows in Jakarta,
Bandung and Surabaya in 2011.
AirAsia Indonesia was named
Best Low Cost Airline at the
2010 Indonesia Tourism Award
on 2 December 2010. The
airline attributes the award, and
its many other successes, to its
people and its culture of open
communication.
Prospects
As of 1 January 2011 the
Indonesian Government has
removed the requirement for
Indonesians to either pay ?scal
(income tax prepayment) or
produce their tax registration
at the airport prior to leaving
the country. This has resulted
in an increase in international
travel, as re?ected in AirAsia
Indonesia’s sales and will
contribute signi?cantly to
continued expansion of the
airline’s international network.
Hong Kong
Thailand
Philippines
Malaysia
Cambodia
Laos
Vietnam
Myanmar
Perth
Darwin
Makassar
Solo
Padang
Pekanbaru
Bangkok
Ho Chi Minh
Bandung
Phuket
Penang
Bali
Indonesia
Australia
Singapore
Kuala
Lumpur
Indian Ocean
Banda Aceh
Medan
Surabaya
Yogyakarta
Jakarta
In 2011, AirAsia Indonesia
intends to strengthen all its
hubs, especially Bali and
Bandung, while fortifying
its position as a ‘?rst-class
low-cost airline’. As part of a
brand enhancement campaign,
the airline is creating greater
awareness of its predominantly
Airbus A320 ?eet.
AirAsia Indonesia will also
strengthen its ancillary
business, and plans to install a
new cargo reservation system.
The Indonesian travel market,
with a population density of 330
million people, is still largely
untapped. And while its priority
lies in the international sphere,
there is also vast potential for
growth in the domestic market
in the near term. These factors
together mean we are very
optimistic about what lies ahead
for AirAsia Indonesia and look
forward to serving more guests
in these exciting times.
Captain Dharmadi
Chief Executive Of?cer
AirAsia Indonesia
<
No. of Aircraft
18
<
No. of Hubs
4
(1 added in 2011)
<
No. of Passengers
3,921,039
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
93
Massive and grand in stature, the Omar Ali Saifuddin
mosque is located in the centre of Brunei’s capital, Bandar
Seri Begawan. We serve 14 weekly fights to Bandar Seri
Begawan from Kuala Lumpur, offering our guests an
opportunity to experience the richness of its economy,
culture and royal heritage.
Omar Ali Saifuddin Mosque, Brunei Darussalam
AIRASIA X >>
THE SKY’S
THE LIMIT
AIRASIA X FLEW 1.92 MILLION PASSENGERS, UP 86%.
AIRASIA X ALSO BROKE THROUGH THE 10 BILLION
REVENUE-PASSENGER-KM VOLUME GROWTH
(UP 74% FROM 2009), MAKING IT THE SECOND-LARGEST
LOW-COST CARRIER IN ASEAN IN RPK VOLUME, AFTER
AIRASIA, AND THE FASTEST GROWING AIRLINE. LOAD
FACTORS WERE KEPT CONSISTENT AT 77%.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
96
AirAsia X completed its third full
year of operations in 2010 and
broke through the RM1 billion
revenue barrier with a RM1.3
billion top-line achievement, a
77% growth from 2009.
It ?ew 1.92 million passengers,
up 86%. AirAsia X also broke
through the 10 billion revenue-
passenger-km volume growth
(up 74% from 2009), making
it the second-largest low-cost
carrier in ASEAN in RPK volume,
after AirAsia, and the fastest
growing airline. Load factors
were kept consistent at 77%.
AirAsia X also continues to
achieve record-breaking unit
operating cost levels through
its pioneering low-cost long-haul
model, with a US2.9c/available-
seat-km unit cost. Non-fuel
costs have further improved to
US1.6c/ASK. A key factor in
this feat is maximising asset
utilisation of its young Airbus
A330-300 ?eet, with AirAsia
X having continued to secure
funding to take delivery of three
new aircraft in 2010, bringing its
?eet total to 11 (nine A330-300s
and two A340-300s). It was
still able to achieve an industry-
leading technical reliability rate
of 99.51% for its A330 ?eet,
validating the quality of its
operating model.
With the new aircraft capacity,
AirAsia X expanded its route
network aggressively in
2010, adding ?ve new routes:
Mumbai, New Delhi, Tehran,
Seoul and Tokyo. And with the
recent additions of Paris and
Christchurch in early 2011,
AirAsia X now serves 15
destinations, connecting AirAsia’s
extensive ASEAN network to the
large growth markets across Asia
Paci?c and Europe. AirAsia X
intends to continue its expansion
strategy to focus on its priority
markets in Australia/New
Zealand, Korea, Japan, China
and India over the next year.
Passenger base fares achieved
were RM519, and passenger-
related ancillary income added
another RM119 per passenger,
a growth of 73% from 2009.
Cargo revenue grew by 113%
over 2009, contributing 4%
of total revenue. With 22% of
revenue coming from these
ancillary income sources, AirAsia
X continues to seek ways to
expand its ancillary income
streams, including improving
duty-free and merchandising
sales, and introducing a ?y-thru
connecting transfer service.
AirAsia X also expects to see
growth from the newly-launched
AirAsia-Expedia joint venture.
In 2010, AirAsia X achieved an
EBITDAR margin of 18% and
EBIT margin of 4%. Final net
income for 2010 was RM111
million, excluding a RM53
million deferred tax asset. This
represents a net income margin
of 9% and a return on equity of
18%. Its gearing ratio has come
down from 3.55 in 2009 to 1.44
in 2010. Operating cash ?ow
grew by 37%, increasing its cash
balance to RM356 million.
Having achieved suf?cient
economies of scale from its
operations, AirAsia X embarked
on a new organisational strategy
to position itself as a stand-
alone airline while continuing to
share the AirAsia brand.
Azran Osman-Rani
Chief Executive Of?cer
AirAsia X
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
97
From the ruins of Angkor Wat in Siem Reap to the
bustling nightlife of Phnom Penh, AirAsia provides a
great link to Cambodia for our guests. Something we
have been doing since 2005.
Angkor Wat, Cambodia
THE
SOCIAL
NETWORK
A man from Kuala Lumpur who
didn’t believe in long-distance
relationships has been dating
a woman in Singapore for three
years - because AirAsia allows
them to meet regularly. A family of
26 that hadn’t travelled together
because it was too expensive got
to enjoy some quality bonding
time away from home - thanks to
AirAsia. A couple who never had
the time nor money to romance
each other ?nally found their
wings and ?ew away for a few
days - because they can, with
AirAsia.
These are just some of the heart-
warming stories AirAsia received
when we ran our Real People, Real
Stories campaign from 23 August
- 4 October 2010, in the run-up
to celebrating our 100 millionth
guest. We had asked guests to
send in their stories, pictures or
videos via any one of the following
AirAsia social media - YouTube,
blog, Twitter or Flickr. The entries
came pouring in. A hundred of
the best were rewarded with free
tickets. AirAsia, meanwhile, was
rewarded by the stories, which
reaf?rmed our belief that we are
not just in any business; we are in
the business of changing lives.
FACTS AT A GLANCE
>
No. of Twitter Fans
>150,000
>
No. of Facebook Fans
>1.3 million
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
100
SOCIAL MEDIA HAVE BECOME AN INTEGRAL PART OF
AIRASIA’S BUSINESS MODEL, FORMING A NEW DIMENSION
OF OUR EXTENSIVE USE OF TECHNOLOGY FOR GREATER
EFFICIENCIES.
The campaign would not have
been as impactful if not for the
social media, which truly bring us
closer to our guests and fans.
Whereas at AirAsia our core
business is to connect people
in the real world, using social
media, we are able to enrich
this connection by taking it to
the virtual realm. Combining the
two, we create a holistic and very
rich relationship with our guests
in which we are able to get to
know them better - know their
life stories, their hopes, their
aspirations and, more practically,
know what they expect of us.
Social media represent effective
tools for real-time interaction
with our guests. On our part, we
are able to use social media to
make announcements, inform
guests of schedule changes, and
launch new destinations through
contests and other viral means.
We also use the media in crisis
management. For example,
in 2010, when Mt Merapi in
Yogyakarta, Indonesia, erupted,
we announced the airport closure
on the social media. When the
?oods in Alor Star, Malaysia,
caused travel delays, guests
were kept posted of updates.
The advantage of social media
over the SMS, email or phone is
that one post has the ability to
reach out to the masses, allowing
for important information to
be disseminated to a targeted
audience quickly and effciently.
Social media also represent an
incredibly powerful and cost-
effective marketing tool. We are
able to use it to advertise our
1 Million Free Seats Campaigns,
saving us millions in ad spend. In
fact, social media have become
an integral part of AirAsia’s
business model, forming a new
dimension of our extensive use of
technology for greater ef?ciencies.
They have also enabled us to
keep a pulse on what our fans
are feeling. Via social media, fans
and guests who travel with the
airline can express their views
on anything related to AirAsia
– the level of service, the food
on board, the range of in-?ight
entertainment – and be assured
that their ‘voice’ will be heard by
the relevant decision makers.
The management highly values
such feedback and takes action
wherever necessary to rectify
loopholes or to further improve
the guest experience.
Our foray into the social media
grew humbly enough, with a
corporate blog, Plane Thoughts,
in 2008. Then, we got into
Facebook. Before long, we were
hooked into the entire social
media game. We started our own
Twitter and Sina, the Chinese
version; Koolred, offering travel
and lifestyle social networking;
Flickr and Instagram, where we
post photos; and even YouTube.
When we launched AirAsia
Facebook in April 2009, the
management expected to garner
a fan base of perhaps 50,000
by year end. We achieved double
that ?gure. By April 2010,
our Facebook had acquired a
following of 250,000 fans, a
milestone which we celebrated
with an exclusive low-fare
campaign for our staunch friends.
Meanwhile, we began to localise
our network of Facebook accounts
by setting up different pages in
different countries. We now have
11 Facebook pages for different
locations. In China, where there
are restrictions on Facebook, we
use RenRen, the local equivalent.
By November 2010, the AirAsia
Group had more than 1 million
Facebook fans.
AirAsia handles all social media
efforts internally. We even built
our own infrastructure, bene?ting
from the learning experience.
Needless to say, we’ve had to
increase the human resources
required to manage our growing
social media. From just one
person in the interactive division,
we now have an entire dedicated
team of Allstar social media
buffs operating out of Malaysia,
Thailand, Indonesia, Hong Kong
and London. Most of our social
media are online 24/7, allowing
us to respond promptly to queries
sent by guests and fans.
The company’s phenomenal
success with the social media
is indicative of a youthful,
tech-savvy culture which starts
from the top. Everyone on the
management team has a blog or
tweets, including AirAsia Group
CEO Dato’ Dr Tony Fernandes
and AirAsia X CEO Azran Osman-
Rani, whose blogs are among
the most-followed of Malaysian
CEOs. AirAsia Thailand CEO
Tassapon Bijleveld and AirAsia
Indonesia CEO Captain Dharmadi,
meanwhile, are active tweeters
in their own markets, carrying
the overall global branding of
AirAsia. AirAsia ensures that every
employee is part of our social
media conversation to enable
them to act as brand evangelists
and to humanise our airline. Our
pilots especially are encouraged
to engage in social media so
that passengers can relate to
them as people rather than as
disembodied voices.
AirAsia has always been the
people’s airline. We are there to
serve the underserved, and to
cater to their particular needs.
Today, with social media, we have
found a new channel of getting
closer to our communities. We
are able to hear them and assist
them in any way possible. And
that just adds to the AirAsia
magic.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
101
A LIFESTYLE
BRAND
<
Ancillary income per guest
RM44
per pax in Malaysia
THB310
per pax in Thailand
IDR123,308
per pax in Indonesia
>
18%
of total income from
ancillary business
AirAsia today is not just an airline, but a lifestyle
brand. Via the Group, consumers from around
the world can purchase branded merchandise,
buy tickets to top concerts and international
sporting events, and plan entire holidays, from
making hotel reservations to arranging for car
rentals and booking tours.
Having built its core business of selling air
travel online, AirAsia is now capitalising on its
e-commerce expertise to expand to other lifestyle
products and services. The year 2010 saw a
number of online initiatives introduced, beginning
on 8 March with AirAsiaRedTix.com, an exciting
gateway to international sporting, music and
theatre events. AirAsia entices entertainment
seekers to this portal by collating all events and
offering attractive discounts on ticket prices plus
other exclusive bene?ts. Two months later, on 26
May, it launched AirAsiaGo.com, a revamped one-
stop online travel portal where holiday-makers
can book their ?ights and tours (if desired),
make hotel reservations, arrange for car hire and
transfers - all at one go and in one sitting. The
travel portal offers a choice of more than 70,000
hotels and over 5,000 tours and activities. We
believe AirAsiaGo has huge potential, especially
as we intend to partner Expedia Inc, the largest
online travel agency in the world. With the
synergies that can be expected, AirAsia will have
the capability to reach farther than the ASEAN
region through new distribution channels which
will be made available to global audiences.
Next, the virtual world was enriched by
AirAsiaMegastore.com, offering over 15,000
items from travel related products to books,
fashion apparel and even home décor,
and allowing a global market to shop at its
convenience. This online portal was preceded
by the opening of the ?rst AirAsia Megastore
outside of the LCC Terminal in Kuala Lumpur.
These facilities are offered under the banner of
AirAsia’s ancillary business, which represents
a signi?cant source of income to the Group,
accounting for 18% of its total revenue in 2010.
This income stream has been developed, in
typical AirAsia style, to be as cost-effective as
possible, the individual initiatives being either no-
cost or low-cost. Ancillary income not only boosts
the airline’s revenue but also provides a natural
hedge against any increase in the price of oil.
Other than the online-based lifestyle initiatives
mentioned above, AirAsia also earns
commission-based income from its co-branded
credit cards with Citibank, as well as for every
CIMB AirAsia Savers Account opened. In
addition, it derives some revenue from sales of
its e-Gift vouchers and from the activities of its
recently launched Junior Jet Club.
A major source of its ancillary income is,
however, ?ight-related. Guests themselves
contribute signi?cantly to AirAsia’s ancillary
income by taking advantage of the little extras
offered to make their travel more enjoyable and
hassle-free, such as travel insurance, choosing
their seats in advance, ordering meals on their
?ights and extra baggage.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
102
In May 2010, AirAsia introduced
a win-win Pre-booked Baggage
Supersize deal in which guests
who pre-book their baggage pay
50% less than those who pay
at the counter. Even with this
discount, in 2010, guests spent
a total of RM290 million for
baggage supersize and excess
baggage. Food and beverage
on board is another source of
healthy revenue for the airline, as
AirAsia Café has become known
for offering ‘legendary’ local fare,
such as Pak Nasser’s Nasi Lemak
and Uncle Chin’s Chicken Rice.
To keep growing this source of
income, continuous efforts are
made to maintain or even improve
on the quality of the food, and
to expand the menu. In 2010,
AirAsia introduced healthier dining
options, including vegetarian
meals. It also entered into a
partnership with Fraser & Neave
Holdings Bhd on 26 January to
sell 100PLUS and Coke on all
AirAsia ?ights departing from
Malaysia beginning 1 February.
Passenger spend on ancillary
services increased across all
AirAsia operations in 2010 - up
39% to RM44 per passenger
in Malaysia, 62% to THB310
per pax in Thailand, and 60% to
IDR123,308 per pax in Indonesia.
The average spend per passenger
was RM44.9 and is targeted to
grow to RM60 per pax in 2011.
Also growing is AirAsia’s income
from its Cargo & Courier Services.
Capitalising on the belly space
of its aircraft, an extensive
?ight network and high ?ight
frequencies, AirAsia is not only
able to carry cargo but can also
offer clients considerably lower
rates than other cargo carriers,
as well as faster delivery times.
To further strengthen its Cargo &
Courier business, it has tied up
with more cargo agents and large
export-import ?rms in the markets
that it ?ies to, while reaching
markets beyond its route network
- in South Asia, Africa, the Middle
East and Europe - through special
pro-rate agreements with other
airlines. AirAsia’s Cargo & Courier
Services not only delighted the
airline with revenue of around
RM130 million in 2010, but also
earned the airline the Air Cargo
Industry Newcomer of the Year
Award 2010 at the ACW World Air
Cargo Awards.
In addition, AirAsia earns
ancillary income from airspace
advertising, namely advertising in
its Travel3Sixty in?ight magazine,
in and on the aircraft, as well as
on its website, and from chartered
?ights. As the airline increases
the number of its ?ights, and
further expands its network,
various ancillary businesses will
be boosted, adding to AirAsia’s
revenue and net pro?t.
In 2011, we expect our ancillary
business to continue to grow,
driven by passenger growth,
which has traditionally increased
every year, as well as capacity
additions in terms of new aircraft.
Guests can also look forward to
new initiatives in 2011, including
AirAsia’s loyalty programme and
the AirAsia-Expedia JV. In addition,
we will be introducing Counter
Check-in fees which, together
with all the other initiatives, will
ensure that our ancillary offerings
contribute even more to our
overall revenue, reducing the
gap with the traditionally strong
passenger fare contribution. With
ancillary income rushing out of its
infancy, it will add to the quality
brand experience that AirAsia
religiously adheres to.
OUR ancillary SERVICES
Baggage Supersize Government and Charter ?ight services
AirAsia Cargo CIMB AirAsia Savers account
AirAsia Courier Junior Jet Club Membership
AirAsia Cafe (in-?ight F&B) Merchandise and duty free
(including AirAsiaMegastore)
AirAsia Insure (travel insurance) AirAsiaGo.com (holiday-booking portal)
Pick A Seat AirAsia Credit Card
E-Gift Voucher Airspace advertising
Charter ?ights AirAsia RedTix (ticket-booking portal for sporting events,
concerts, musicals, theatre performances and more)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
103
Love is in
the air
“ It was a memorable
moment to have our
wedding reception in
the aircraft 30,000ft
above sea level. What a
wonderful moment and
journey for us to realise
this dream. ”
Iswara (Allstar) and Thanusyia
now everyone can fy
OUR GUESTS
ARE OUR
PRIORITY
Since 1 April 2010, AirAsia
has deployed a comprehensive
Microsoft-based Customer
Relationship Management
(CRM) system which integrates
its various sales, service and
marketing initiatives onto a
single platform, allowing the
Group to interact with guests
on a more informed basis and
to tailor its services to meet
individual guest’s needs.
The main focus of AirAsia’s
CRM is to enhance the guest’s
experience by improving the
speed and ef?ciency of service
at every interface between
guests and the airline – from
reservations and check-in, to
baggage handling, boarding and
in-?ight service to the provision
of rapid and effective responses
to queries and feedback. At
the airports, AirAsia stations
supervisory staff at strategic
locations to provide on-the-spot
assistance to guests. There
are also Service Counters in
the departure halls to handle
enquiries. Meanwhile, as more
than 80% of sales are achieved
online, and guests rely heavily
on the internet to manage their
bookings, various initiatives
were implemented over the year
to enable guests to perform
more functions using the AirAsia
website so as to have the
smoothest journey possible.
Web and Self Check-In
facilities. In January, AirAsia
introduced the concept of web
and self check-in. Web check-in
allows guests to check in from
their laptop or PC days before
their departure date. Self check-
in, meanwhile, employs kiosks
at the airport terminals where
guests can quickly key in their
?ght details to obtain a boarding
pass without having to queue up
at a counter.
New Skies. This new reservation
system, installed in July, uses
next-generation IT architecture
and software so it’s more ef?cient
and reliable. It provides more
functionality, ?exibility and friendly
features that enrich the guests’
booking experience. A particularly
useful feature is the Low Fare
Finder, which helps guests
?nd the cheapest ?ight period
for a given route. In terms of
capacity, New Skies is designed
to handle up to almost one
million ?ights a day, double that
of the Open Skies system used
previously. This will be especially
useful during AirAsia’s zero-fare
campaigns.
In 2010, AirAsia also introduced
new mobile apps for smart
phones which made booking-on-
the-move more convenient.
FACTS AT A GLANCE
>
Launching soon
airasia.com/ask
>
Online sales
77%
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
106
This advertisement is issued and published by The Royal Bank of Scotland plc which is authorised and regulated by the Financial Services Authority in the United Kingdom. Registered Of?ce: 36 St Andrew Square,
Edinburgh EH2 2YB. Registered in Scotland No. 90312. Registered in Australia: ABN 30 101 464 528. This advertisement has been prepared for information only. It should not be construed as an offer to sell or the solicitation
of an offer to subscribe for a product or service. The Royal Bank of Scotland N.V. is incorporated in the Netherlands. The Royal Bank of Scotland plc and The Royal Bank of Scotland N.V. are authorised agents of each other
in certain jurisdictions. RBS Securities Inc., a registered broker-dealer and member of FINRA/SIPC, is an indirect, wholly owned subsidiary of The Royal Bank of Scotland plc.
AirAsia gains competitive
advantage with unique
FX currency solution
With our unique insight into currency and interest rate risk management,
RBS expanded and tailored our leading FXmicropay solution to ?t AirAsia’s
challenging, multiple-currency requirements.
With customer and company exposure to exchange rate uncertainty
removed, AirAsia offers customers a much enhanced electronic ticket
sales experience.
To discover more visit rbs.com/gbm
Air Asia AnnRep V3 (226x286) HR.indd 1 28/04/2011 16:05
Instant Foreign Exchange
Calculator. In May, AirAsia
introduced an automated
small-value payment tool, RBS
FXmicropay, which connects the
airline’s internet booking system
with the currency trading desk
of the Royal Bank of Scotland
(RBS). This allows guests who
make bookings online to know
their exact transaction costs in
any of the available currencies. A
particularly attractive feature for
guests is the convenience of being
charged in the same currency
in which they are billed in their
monthly credit card statements.
The service is currently available
in ?ve global currencies – Euro,
Pound Sterling, New Zealand
dollar, Singapore dollar and US
dollar. In addition, the system
saves guests from currency
conversion fees.
Fly-Thru. This service allows
guests on multiple ?ights to
perform a single check-in for
their original and connecting
?ights right through to their ?nal
airport of destination. To be
implemented in January 2011,
Fly-Thru will be available for
travel on selected short-haul
AirAsia and all long-haul AirAsia
X ?ights transiting through Kuala
Lumpur in which the original
and forward ?ights have a
connecting time of between
90 minutes and six hours.
airasia.com/ask. This
integrated service will
allow guests to obtain real-
time information and enjoy
immediate solutions on AirAsia’s
suite of services. It will be
available to anyone anywhere in
the world, serving as a platform
for guests to pose questions
and engage with AirAsia via live
chat, webmail and Twitter. As
soon as a query is received,
airasia.com/ask will provide
speci?c, tailor-?tted answers
in real time through the use of
intelligent automated response
technology.
At present, AirAsia measures
the quality of Customer Care
performance according to the
Customer Care of?cers’ timely
response to guests’ concerns.
The target is a response time of
less than three business days,
which is often met. As part of
improvements, the airline is
adding a dimension of quality
to this purely quantitative
measurement. More speci?cally,
it would like to gauge the level
of guest satisfaction with the
service provided by Customer
Care of?cers. Hence, responses
to guests will be followed by a
customer satisfaction survey
that asks questions such as:
‘Are you satis?ed with the
responses to your queries?’ and
‘Were your questions answered
adequately and professionally?’
AirAsia’s CRM initiatives have
led to several awards, most
notably being named the
World’s Best Low Cost Airline by
passengers polled by Skytrax in
2009 and 2010. These are the
results of the commitment and
passion of its more than 8,000
Allstars and the innovative
use of technology. AirAsia
recognises the contributions of
its people and technology, and
will continue to invest in both so
as to maintain its unbeatable
combination of low-cost fares
and highest quality service.
THE MAIN FOCUS OF AIRASIA’S CRM IS TO ENHANCE THE
GUEST’S EXPERIENCE BY IMPROVING THE SPEED AND
EFFICIENCY OF SERVICE AT EVERY INTERFACE BETWEEN
GUESTS AND THE AIRLINE – FROM RESERVATIONS AND
CHECK-IN, TO BAGGAGE HANDLING, BOARDING AND IN-
FLIGHT SERVICE TO THE PROVISION OF RAPID AND EFFECTIVE
RESPONSES TO QUERIES AND FEEDBACK.
PAGE >
108
AIRASIA BERHAD
ANNUAL REPORT
2010
ALLSTARS,
EVERY
SINGLE ONE
EQUALLY IMPORTANT IS THE RIGHT ATTITUDE - AN OPENNESS TO NEW
IDEAS, WILLINGNESS TO DO THINGS DIFFERENTLY AND THE ABILITY,
WHEN THINGS GET TOUGH, TO TRY AND TRY AGAIN.
Culture Department was set up in 2004 for the sole
purpose of creating the same values and vision
across the Group with an emphasis on ‘ONE People,
ONE Culture, ONE AirAsia, ONE Family’. Various
fun activities are held, sometimes even involving
Allstars’ children, to reinforce the feeling of unity and
belonging.
There is a great sense of empowerment at AirAsia,
enhanced by an open of?ce layout which encourages
easy interaction between everyone, and a ?at hierarchy
that breaks down psychological and cultural barriers.
There are no titles on name cards and everyone is on
?rst name basis. Allstars can go up to any member of
the management team to voice an opinion or share
an idea. Two-way communication is highly valued
and reinforced by informal interaction, face-to-face
meetings, group meetings and town hall sessions.
All top managers have blogs or send tweets to share
experiences. For a few days every month, the Group
CEO himself checks in guests at the counters, handles
baggage on the ramp and even works the aisles to
keep in touch with what’s happening on the ground,
and in the air.
Good ideas, proposed by anyone, can be
implemented quickly because there is little
bureaucracy. At the same time, bad ideas can be
scrapped just as fast. This informal structure means
not only that there are more than 8,000 brains (of
Allstars) contributing to the company’s performance -
as opposed to just the 20 or so at management level
- it also helps to keep costs down, an ever important
consideration at AirAsia.
Human capital development at AirAsia is about
providing opportunities to our Allstars that they would
be hard-pressed to ?nd in any other organisation. It
has meant, for example, ful?lling the dreams of cabin
crew and ground of?cers to become pilots. AirAsia
runs a cadet pilot programme, through which we
send up to 60 young recruits every year for a 15- to
18-month commercial pilot training programme at a
recognised ?ying school in Malaysia or overseas, after
which they train speci?cally to ?y Airbus aircraft at
the AirAsia Academy in Sepang. The academy, set up
in 2005, also trains engineers, cabin crew and other
operational staff. It is equipped with six simulators,
and also takes in trainees from third-party airlines.
When we say we value our staff, we’re not paying
lip service. At AirAsia we recognise that our people
have made us what we are today. They have stood
by us, through good times and bad, and with their
passion, dedication and sheer tenacity have kept
the AirAsia brand ?ying. Because of who they are,
and what AirAsia stands for, we do not refer to them
as our ‘employees’; they are our Allstars. And we
treat them as such.
Our philosophy at AirAsia is to attract the best,
train them and retain them. By the best, we do
not just mean people with the most impressive
paper qualifcations. Equally important is the right
attitude - an openness to new ideas, willingness
to do things differently and the ability, when things
get tough, to try and try again. We take pains to
recruit people who are able to ?t into our Allstar
culture, which is about safety, being innovative and
creative, working hard and having fun. A Corporate
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
109
As part of our objective to nurture our Allstars, they are encouraged to apply for any vacancy advertised
by AirAsia, either internally or externally. Wherever possible, Allstars are given preference over external
candidates. Based on their performance, Allstars are also identi?ed by their managers, or even higher level
management, for further professional development. Every year, we spend about RM15 million on training our
people. Loyalty and performance are highly valued and rewarded not only with the opportunity to fast-track
careers but also by attractive bonuses and pay increments. Goals are set for each Allstar and performance
measured against these goals at regular intervals. At year end, performance is linked to bonuses and
increments as well as promotions. Given AirAsia’s fast growth, there are endless opportunities for high-?yers
to stretch their capabilities, and take on roles of greater responsibility.
Like the founders of the airline, who had a dream and who have been able to turn this dream into reality, we
encourage our Allstars to dream the impossible. And we show them that, at AirAsia, everything is possible.
>
ALL FOR ONE
ONE FOR ALL
>
GO TEAM
GO ALLSTARS
GO AIRASIA
>
WHAT AIRASIA
CULTURE
STANDS FOR
We are many things,
but together we are one AirAsia
caring
passionate
full of integrity
fun
safety conscious
hard working
uni?ed by one dream
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
110
Congratulations to AirAsia
on your continued growth.
CAE is proud to be AirAsia’s training partner.
Future AirAsia pilots: the 1
st
graduating class
of the CAE Multi-crew Pilot License program, May 2011.
www.aviationaustralia.aero
EXCELLENCE IN
AVIATION TRAINING
Aviation Australia trains and provides
aircraft maintenance engineers and ?ight
attendants to international standards for
the global aviation industry.
Aviation Australia is proud of the
licensed maintenance engineer workforce
developed in partnership with Air Asia.
AVIATION AUSTRALIA - AIR ASIA’S AVIATION TRAINING PARTNER
CONGRATULATES AIR ASIA ON ACHIEVING 2 TREMENDOUS MILESTONES.
We put at your disposal our expertise that has become the
reference to all financial institutions willing to venture into
the world of Islamic Finance. By also introducing the pioneers
of the industry who have graduated from our school of thought
and culture, that has been rightfully given the name of “The
Harvard of Islamic Banking”, you can be certain that you’re
leaving no room for compromise when partnering with Kuwait
Finance House.
Kuwait Finance House... Security & Peace of Mind
A Symbol for Respect & Authority
www.kfh.com.my 03-2056 7777
OUR SAFETY
COMMITMENT
AirAsia has committed itself to a programme of reducing risks and
hazards normally associated with our industry through a Safety
Management System. This commitment is extended to ensure
the full integration of a safety culture, safety policy and safety
objectives in a proactive approach to aviation safety. In short, our
Safety Management System is not just an add-on but a core part of
our business process. It is the way we do business.
The critical safety functions of senior management are in the areas
of strategy and leadership. Senior management will provide a vision
for safety management and provide adequate resources to achieve
this level of safety.
A Safety Management System relies on the development of a
reporting culture by all employees. A just reporting system forms
the framework around which the Safety Management System is
built. It is a vehicle for ensuring that hazards and safety de?ciencies
are brought to the attention of those who have the authority to
make changes. I pledge that no disciplinary action will be taken
against any employee for reporting a safety hazard or concern to
this company’s management. I pledge also that no staff member will
be asked to compromise our safety standards to ‘get the job done’.
The Safety Management System approach ensures that authority
and accountability co-exist.
Training of employees to ensure they can perform their tasks in a
safe and ef?cient manner is an essential ingredient of AirAsia’s
Safety Management System. It is management’s responsibility to
make available and carry out this training, and it is the employee’s
responsibility to follow safe working practices.
The ultimate responsibility for safety in the company rests with me
as the Chief Executive Of?cer/Accountable Manager. Meanwhile,
the responsibility for making our operations safer for everyone lies
with each one of us – from heads of department and/or managers
to front-line employees. Each head of department and/or manager
is responsible for implementing the safety management system
in his or her area of responsibility, and will be held accountable to
ensure that all reasonable steps are taken to prevent incidents and
accidents. Each of us will be concerned for the safety of others in
our organisation.
Our business will be strengthened by making safety excellence an
integral part of all our aviation activities. Safety is a core value of
this company, and we believe in providing our employees and guests
with a safe environment. All employees must comply with this policy.
CORPORATE SAFETY COMMITMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
114
Safety is given top priority in all of our activities.
We are committed to developing, implementing,
maintaining and improving our safety strategy,
management systems and processes to ensure
that all our aviation activities are undertaken with
balanced resource allocation, aimed at achieving
the highest level of safety performance and
meeting the highest international safety standards.
All levels of management are accountable for the
delivery of this highest level of safety performance,
starting with the Chief Executive Of?cer.
Our commitment is to:
a) Develop and embed a safety culture in all
our aviation activities that recognises the
importance and value of effective aviation
safety management and acknowledges at all
times that safety is paramount.
b) Clearly de?ne for all staff their accountabilities
and responsibilities for the development
and delivery of aviation safety strategy and
performance.
c) Ensure that all staff are provided with
adequate and appropriate aviation safety
information and training, are competent in
safety matters and are only allocated tasks
commensurate with their skills.
d) Establish and implement a hazard
identi?cation and risk management process
to minimise the risks associated with
aircraft operations to a point that is as low
as reasonably practicable/achievable, and
conduct safety reviews to ensure that relevant
action is taken.
e) Ensure that suf?cient skilled and trained
resources are always available to implement
safety strategy, policy and processes.
f) Establish and measure our safety performance
against realistic objectives and/or targets.
g) Ensure that the externally supplied systems
and services that impact upon the safety
of our operations meet appropriate safety
standards.
h) Actively develop and improve our safety
processes to conform to world class
standards and comply with and, wherever
possible, exceed legislative and regulatory
requirements and standards.
i) Foster and encourage the maximum level of
reporting and transparency with non-punitive
safety/hazard reporting and having a just
culture in the airline.
Dato’ Sri Dr. Tony Fernandes
Group Chief Executive Of?cer
SAFETY POLICY STATEMENT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
115
“ Since I’ve known
AirAsia three years ago,
my family’s fate is
changing. We travel
overseas by AirAsia,
twice a year or at least
once a year, thanks to
the generous never-
ending promotions and
low fares. ”
Amazing
Bargains
Nina
Singapore
now everyone can fy
AN AIRLINE WITH
A GIANT HEART
THE FREE SEATS CAMPAIGN IS BUT ONE OF THE MYRIAD WAYS IN WHICH
AIRASIA GIVES BACK TO THE COMMUNITY – ALBEIT BEING ONE OF OUR
MORE SPECTACULAR AND UNIQUE CONTRIBUTIONS TO SOCIETY.
No corporation can live apart
from the community it serves.
That fundamental belief of our
founders underpins the approach
towards corporate responsibility
throughout AirAsia. It informs
and impacts every aspect of
our business, making corporate
responsibility an inherent
characteristic of everything we do.
Which helps explain the mind-
blowing One Million Free Seats
campaign AirAsia holds every
year since 2006 (actually, we
gave away two million free seats
that year). Quick: Which other
company, be it in the ASEAN
region or the world, gives away
one million of its products for
free every year? Why do we do
it? Because we are dedicated to
serving the underserved; because
we are committed to sharing our
success with the communities
that allow us to operate in their
midst; because it underlines the
unwritten social contract neatly
encapsulated in our tagline, ’Now
Everyone Can Fly’ – and, if you’re
lucky, do so for free!
The free seats campaign is
but one of the myriad ways in
which AirAsia gives back to the
community – albeit being one of
our more spectacular and unique
contributions to society. But it
isn’t the only thing we do. In
line with our philosophy towards
corporate responsibility – which
goes beyond philanthropy in
making a positive difference in
the lives of our community –
AirAsia is often also among the
leaders in lending a helping hand
– or an aircraft or two – when the
community most needs it.
Here are a couple of examples:
AirAsia was the ?rst to offer to
evacuate Malaysian students out
of Cairo when political turmoil
struck Egypt. As acknowledged
by the Malaysian Prime Minister
himself, we swiftly took the lead
in arranging this rescue mission
that ultimately saw eight AirAsia
?ights from Cairo and Alexandria
to Jeddah and one from Jeddah
to Kuala Lumpur – plucking 2,380
Malaysians from a danger zone
and delivering them into the arms
of their loved ones in Malaysia. On
a somewhat less dramatic note,
but just as crucial an effort closer
to our home in ASEAN, AirAsia
Thailand swung into action to
airlift provisions and other relief
supplies to several areas in that
country when it was inundated by
the worst ?oods experienced in 50
years.
The Heart Of Asia
We have shown that we are an
airline with heart in other ways
too. We regularly run blood
donation campaigns – in 2010,
AirAsia Indonesia organised a
massive campaign for victims of
the tsunami in Mentawai and the
eruption of Mt Merapi, following
this with another blood donation
drive in collaboration with the
Indonesian Red Cross Society.
The airline also eased some of
the ?nancial burden of families
struggling to rebuild their lives
following the natural disasters
by donating school supplies for
their children. In Thailand, we
sponsored children to participate
in the Special Olympics in
Singapore and organised a trip to
the beach in Phuket for children
from the private charity school
Cheewit Boriboon House in the
hill district of Kallayanivatana,
Chiang Mai. The two-day trip was
an experience the children will
never forget, as they had never
before been on a plane nor seen
the ocean.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
118
Since 2008, the AirAsia group has
been running a Donate Your Loose
Change campaign to raise funds
to help needy patients from the
region to undergo treatment at
the National Heart Institute (IJN)
in Kuala Lumpur. In July 2010, the
programme bene?tted four-year-old
I Wayan Arya sila Arsadhana from
Bali, Indonesia, who was cured of
a congenital defect that reduced
the oxygen-carrying capacity of
his blood. While funds for his
treatment came from generous
guests on AirAsia ?ights, the
airline paid for the airfare of I
Wayan Arya and his parents.
We also partner the Children’s
Wish Society (CWS) to ful?l the
wishes of children with life-
threatening diseases. In 2010,
we waved our magic wand in the
direction of Miri, Sarawak, where
a 10-year-old Duchenne Muscular
Dystrophy patient, Mohammad
Nuraliff Omar, lives. Nuraliff
wished to have happy memories
with his parents and also to see
as many animals as he could.
Since there isn’t a proper zoo in
Sarawak, on 15 October 2010,
AirAsia ?ew the beaming Nuraliff
and his parents to Kuala Lumpur
where they visited Zoo Negara
and the Aquaria KLCC.
Our help is not restricted to Asia.
AirAsia joined hands with the
United Nations Children’s Fund
(UNICEF) to raise funds for victims
of the earthquake that struck
Haiti in January 2010. By quickly
establishing a link on our website
through which the public could
donate money, AirAsia helped to
channel millions to children and
their families in the country that’s
acknowledged as the poorest in the
Western hemisphere.
Our innovative approach to
corporate responsibility – whether
in the celestial sphere with our
aircraft or in the terrestrial realm
by our Allstars – is but another
link that bonds AirAsia with the
communities it serves.
Grooming Local Heroes
We don’t just stop there.
Realising that every community
and society needs heroes, we
decided that this was another
avenue through which we can
contribute. So, we’ve undertaken
a mission to discover and nurture
local heroes in ASEAN. And we
are doing it in the sports arena.
Why sports? Because it is a ?eld
where passions run high, and
one that transcends the usual
obstacles that tend to divide us
in this region we all call home.
There’s our title sponsorship of
the ASEAN Basketball League
– the region’s only professional
league in any sport. We’ve also
signed a three-year deal with the
Philippine Patriots basketball
team, the inaugural champions
of the ABL, to be their exclusive
sponsor. Our focus is on grooming
young basketball talents of
ASEAN to become world-class
– to demonstrate that there’s
nothing we cannot do as a people
if we put our minds to it.
We have also turned our focus
to motor sports, an area where
we believe Asians can compete
very effectively since what
counts is not physical size but
determination and determination.
In 2010, we worked with the
Sepang International Circuit (SIC)
to ?eld two riders, Malaysia’s own
Muhammad Zulfahmi Khairuddin
(Fahmi) and Sturla Fagerhaug
from Norway, in the 2010 MotoGP
World Championship. The 19-year-
old Fahmi is only the second
Malaysian ever to participate
in the MotoGP. In a stunning
achievement, he broke into the
top 20 in the Malaysian MotoGP
in 2009, becoming one of the ?rst
two wildcard riders to achieve the
feat that season – a spectacular
achievement given that he only
began racing professionally a year
ago. Fahmi has since completed
the ?rst season, scoring four
points, and began his second
season of the MotoGP in March
2011. His performance vindicated
our belief that Asians can
succeed on the world motor stage
if they are given the support,
encouragement and opportunity.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
119
In May 2010, AirAsia launched
the AirAsia-Team Lotus Driver
Development Program, capitalising
on our relationship with the
Formula 1 Team Lotus. Beginning
with just two young recruits from
ASEAN – Nabil Jeffri from Malaysia
and Daim Hishammudin from
Singapore - the programme has
grown to include seven talented
youngsters, four of whom are from
the region. The objective is to use
the expertise of Team Lotus to
coach and support the aspiring
drivers, and hopefully nurture them
into future world champions.
At the individual level, AirAsia has
identi?ed a number of Malaysian
sporting talents and sponsored
their continued development. The
list of our sports ambassadors
includes tennis players, athletes
and cricketers such as Arul
Suppiah, the only Malaysian to
have played ?rst class cricket
in England. Arul has played
for Somerset County – one of
England’s top teams – for the last
nine years as well as represented
England at four different age
levels. This 26-year-old Malaysian
has done the country proud by
being described as one of the
best ?elders in England.
Heroes all – making our
community proud and earning
ASEAN plaudits in a very
competitive environment.
The Best To Our Guests
Corporate responsibility
means being responsible to
all our stakeholders, and this
includes our guests. AirAsia has
consistently striven to provide
the best service at the best
prices to our valued guests
using the IT platform to increase
ef?ciencies and offer value-added
innovations. From the time we
began operations and were the
?rst in Asia to go ticketless with
online and phone bookings, we
have added an increasing suite
of technology-based offerings
that make it more convenient for
guests to book their ?ights and
manage their travel. Some of
our customer-related innovations
have even been world ?rsts.
We were the ?rst to offer SMS
bookings in 2003, followed by
a comprehensive system for
booking via the mobile and other
wireless devices in 2004.
In our constant quest to provide
the most affordable air travel
option, we achieved another
world ?rst in November 2008, by
abolishing the fuel surcharge from
all AirAsia ?ights. This was all the
more pronounced as the move
came just four months after the
global price of oil hit its historic
high of US$147.27 per barrel.
While achieving these
milestones, we have not let up
on performance and, aided by
the steady replacement of our
aircraft with the more ef?cient
Airbus A320 planes, we have
improved our on-time record. The
Group achieved an average on
time performance (OTP) for the
year 2010 of 81%, and we are
con?dent of improving this ?gure
once our Indonesian af?liate fully
converts to an all-A320 ?eet.
In 2010, its OTP lagged slightly
behind the other two airlines, both
operating all-A320 ?eets, at an
annual average of 73%.
See The World, Save The Planet
While we strive to do our best
for the people of ASEAN, we
are also keenly aware that our
responsibility extends to the
environment – especially given
the alarms generated by climate
change. Hence, our business
model is centred on the most
ef?cient use of resources, which
results in minimum waste. Our
decision to switch to the more
ef?cient Airbus A320 in phases
beginning in 2005 has resulted
in AirAsia having the youngest
aircraft ?eet in Asia. Our aircraft
not only are cheaper to maintain
-- 35% less in maintenance costs
-- but they also burn less fuel.
The A320 has a greater seat
capacity, allowing us to carry
32 more passengers per ?ight,
while achieving 15% greater fuel
ef?ciency on an available seat
kilometre (ASK) basis compared
to a typical legacy carrier.
AirAsia also manages to
reduce our carbon footprint by
maintaining point-to-point ?ights,
with no transits in between. To
keep our aircraft weight low, we
impose a tier of differential pricing
for baggage according to weight,
encouraging our guests to ?y
as light as possible. Together,
these initiatives have led to a
healthy fuel consumption of 169
barrels of fuel per million ASK in
2010. The fact that AirAsia is a
ticketless airline also contributes
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
120
to a healthier environment by
reducing unnecessary paper
usage. Our of?ces, too, are as
close to paperless as possible.
An Allstar Workplace
Of course, given our philosophy
towards corporate responsibility,
the same values that we practise
in the community are extended
to our workplace. Thus, we are
a meritocracy. Staff are hired
and promoted based on their
capabilities and competency.
Gender, creed, age, ethnicity
– none of these enter into the
calculation. We believe our
guests expect us to be thoroughly
professional in our duties –
and we strive to exceed their
expectations. We ?gure that as
long as a person is good enough
and qualifed enough, he or she is
welcome to join our Allstars team
– even if the individual comes
from outside the airline industry.
Even our Group CEO and Deputy
Group CEO are from the music
industry. We believe that passion,
determination, dedication and
a positive ‘can-do’ mindset are
more important qualities than
experience in the airline industry.
It’s an approach that has helped
AirAsia become the much-envied
industry leader that it is today
– and why we are the employer
of choice of our creative and hard-
working Allstars.
We provide career development
opportunities no other airline –
and very few other corporations
-- does. We have trained ?ight
attendants, guest services
of?cers and call centre operators
to become pilots. In 2005, we set
up our AirAsia Academy where
we train not only pilots but also
engineers, cabin crew and others.
The academy is equipped with the
most modern training equipment,
including six simulators, and
also serves as a quality training
ground for third-party airlines.
In the workplace, we have a
?at management structure and
an open of?ce layout which
contribute to greater interaction
between our Allstars and the
feeling that everybody counts.
Safety First
Top priority is given to safety at all
times. The Group provides safety
training to all staff at the AirAsia
Academy, and implements best
practices in the maintenance and
routine checks of our aircraft.
These operations are regularly
reviewed by internal and external
safety experts. The Group has
developed a quality assurance
system to monitor ground and
fight operations, and our quality
assurance team ensures that all
industry standards, especially
DCA guidelines, are strictly
adhered to. The DCA conducts
audits on the Group twice a year.
The A320 ?eet are checked
every day. In addition there are
weekly checks, 400 ?ight hour
checks, E checks and C checks,
all of which are monitored by the
Group’s engineering department,
centralised in Kuala Lumpur. The
engineering department has also
initiated several maintenance and
engineering initiatives to enhance
?ight data management, and
increased the frequency of transit
and hangar surveillance. Given
the scale of growth of the Group’s
?eet, the Group has subscribed
to an Aircraft Management
& Overhaul Maintenance
System (AMOS), which includes
information on maintenance,
repairs and operations.
To further enhance the safety of
our aircraft, AirAsia has teamed
with Rockwell Collins to equip the
A320s with a modern avionics
package which includes a multi-
scan hazard detection system
to analyse weather hazards, and
a GLU-925 multi-mode receiver,
which enhances precision landing
capabilities.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
121
The Macau route is an important gateway to China.
When our frst fight departed from Kuala Lumpur on
15 December 2004 with a full load of 148 guests, we
knew it was the beginning of an incredible journey.
Today, the AirAsia Group is the largest airline servicing
Macau from Kuala Lumpur and Bangkok
St. Francis, Macau
STATEMENT
ON CORPORATE
GOVERNANCE
THE BOARD OF DIRECTORS OF AIRASIA IS COMMITTED IN ENSURING THE HIGHEST STANDARDS OF
CORPORATE GOVERNANCE ARE APPLIED THROUGHOUT THE GROUP. THE BOARD CONSIDERS THAT IT
HAS COMPLIED THROUGHOUT THE YEAR UNDER REVIEW WITH THE PRINCIPLES AND BEST PRACTICES
AS SET OUT IN THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (“THE CODE”). THE FOLLOWING
SECTIONS EXPLAIN HOW THE COMPANY APPLIES THE PRINCIPLES AND SUPPORTING PRINCIPLES OF
THE CODE.
A. DIRECTORS
Roles and Responsibilities of the Board
The Board retains full and effective control over the affairs of the Company and the Group and has assumed the following to ensure the
effectiveness of the Board and to discharge its duties and responsibilities:-
• Reviewing and adopting a strategic plan for the Company;
• Approves the Company’s annual budget and carries out periodic review of the achievements against business targets;
• Identifying principal risks and to ensure implementation of appropriate system to manage these risks;
• Overseeing and evaluating the conduct of the Company’s business;
• Succession planning;
• Developing and implementing an investor relations program; and
• Reviewing adequacy and integrity of the Company’s internal controls.
Board Balance and Meetings
The Board of Directors consists of nine (9) Members, the details are given on pages 42 to 47. One (1) of the Board Member is the Non-
Executive Chairman, two (2) are Executive Directors and six (6) are Non-Executive Directors. Five (5) of the Non-Executive Directors ful?l
the criteria of independence as defned in the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa
Malaysia”). The high proportion of Independent Non-Executive Directors (more than one-third) provides for effective check and balance in the
functioning of the Board.
The Board is of the opinion that the appointment of Senior Independent Non-Executive Director to whom concerns may be conveyed, is not
necessary as the Chairman fully encourages Board members to actively participate in Board meetings.
The roles of Chairman and Group Chief Executive Of?cer (“Group CEO”) and the Group Deputy Chief Executive Of?cer are separate with a clear
division of responsibility between them.
The size, balance and composition of the Board supports the Board’s role, which is to determine the long term direction and strategy of the
Group, create value for shareholders, monitor the achievement of business objectives, ensure that good corporate governance is practised and
to ensure that the Group meets its other responsibilities to its shareholders, other stakeholders and guests.
The Non-Executive Directors are persons of high caliber and integrity, and they collectively possess rich experience primarily in ?nance, in
Government and private sector enterprises and bring wide and varied commercial experience to Board and Committee deliberations. The
Non-Executive Directors devote suf?cient time and attention as necessary in order to perform their duties. Other professional commitments
of the Non-Executive Directors are provided in their biographies on pages 42 to 47. The Board requires that all Non-Executive Directors are
independent in character and judgment who do not participate in the day-to-day management of the Company and do not involve themselves in
business transactions or relationships with the Group, in order not to compromise their objectivity.
Board meetings for each ?nancial year are scheduled well ahead before the end of the preceding ?nancial year so that the Directors can plan
accordingly and ?t the year’s Board meetings into their respective schedules.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
124
STATEMENT
ON CORPORATE
GOVERNANCE
During the ?nancial year ended 31 December, 2010, the Board of Directors held a total of ?ve (5) meetings and the details of Directors’
attendances are set out below:
Name: No. of Meetings Attended
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar 5
Dato’ Sri Dr. Anthony Francis Fernandes 5
Dato’ Kamarudin bin Meranun 4
Conor Mc Carthy 3
Dato’ Leong Sonny @ Leong Khee Seong 5
Dato’ Fam Lee Ee 5
Datuk Alias bin Ali 4
Dato’ Mohamed Khadar bin Merican 4
En. Mohd Omar bin Mustapha
1
N/A
Note 1
Note 1: En. Mohd Omar bin Mustapha was only appointed on 16 March 2011
Supply of Information
Five (5) days prior to the Board Meetings, all Directors will receive the agenda and a set of Board papers containing information for
deliberation at the Board Meetings. This is to accord suf?cient time for the Directors to review the Board papers and seek clari?cations that
they may require from the Management or the Company Secretary. Urgent papers may be presented and tabled at the Board meetings under
supplemental agenda. The Board meeting papers are presented in a concise and comprehensive format. Board meeting papers tabled to
Directors include progress reports on business operations by GCEO; detailed information on business propositions; quarterly and annual
?nancial statements, corporate proposals including where relevant, supporting documents such as risk evaluations and professional advice
from solicitors or advisers and report on the directors’ dealings in securities, if any. In order to maintain con?dentiality, meeting papers on
issues or corporate proposals which are deemed material and price-sensitive would be handed out to Directors at the Board meeting. The
Company Secretary ensures that all Board meetings are properly convened, and that accurate and proper records of the proceedings and
resolutions passed are recorded and maintained in the statutory register at the registered of?ce of the Company.
As a Group practice, any Director who wishes to seek independent professional advice in the furtherance of his duties may do so at the
Group’s expense. Directors have access to all information and records of the Group and also the advice and services of the Company
Secretary, who also serve in that capacity in the various Board Committees. The Company Secretary also serves notice to Directors on the
closed period for trading in AirAsia Berhad shares, in accordance with the black-out periods stated in Chapter 14 on Dealings in Securities of
the MMLR of Bursa Malaysia.
Appointments to the Board
The Group has implemented procedures for the nomination and election of Directors via the Nomination Committee. The Company Secretary
will ensure that all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligations
are met.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
125
Directors’ Training
All the Directors have attended the Mandatory Accreditation Program prescribed by Bursa Malaysia.
Directors are regularly updated on the Group’s businesses and the competitive and regulatory environment in which they operate. Directors,
especially newly appointed ones, are encouraged to visit the Company’s operating centre to have an insight on the Company’s operations
which could assist the Board to make effective decisions.
For the year under review, the Directors had continuingly kept abreast with the development in the market place with the aim of enhancing their
skills, knowledge and experience.
Among the training programmes, seminars and brie?ngs attended during the year were as follows:-
Name: Programmes
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar • IBM 2010 Global CEO Study
• Evening Talks on Corporate Governance by Bursa Malaysia
Dato’ Sri Dr. Anthony Francis Fernandes • Y1 Malaysia roundtable discussion
• Turner Asia Pacifc Leadership
• Invest Malaysia Roadshow with Bursa Malaysia
• 2010 National Tax Conference
• Asian Bloggers Social Media Conference
• Y1 Malaysia Seminar
• Pemandu CEO Forum
• 1st Annual Credit Suisse Emerging Markets Leadership Forum
• On-going private briefngs on fnancial markets by AirAsia’s key
bankers
Dato’ Kamarudin bin Meranun • On-going private briefngs on fnancial markets by AirAsia’s key
bankers
Dato’ Leong Sonny @ Leong Khee Seong • Forum on FRS 139 Financial Instruments: Recognition and
Measurement
• World Capital Markets Symposium 2010
Dato’ Fam Lee Ee • Forum of FRS 139 Financial Instruments by Bursa; and
• SC-Bursa Corporate Governance week 29/10/10
Conor Mc Carthy • Raymond James Growth Airlines Seminar
Datuk Alias bin Ali • 6th World Islamic Economic Forum
• Understanding related party and confict of interest transactions
reporting compliance and Statutory derivative action in Malaysia
Dato’ Mohamed Khadar bin Merican • Board High Performance Program – Leadership Best Practices by
Harvard Business School, United States
• Financial Institutions’ Directors’ Remuneration Programme by
Bank Negara Malaysia
• Briefng on Global Entertainment & Media Outlook 2010 by
PricewaterhouseCoopers
All Directors were also updated by the Company Secretary on changes to the relevant guidelines on the regulatory and statutory requirements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
126
Re-election of Directors
The Articles of Association of the Company provide that at least one-third of the Directors are subject to retirement by rotation at each Annual
General Meeting (“AGM”) and that all Directors shall retire once in every three years, and are eligible to offer themselves for re-election. The
Articles of Association also provide that a Director who is appointed by the Board in the course of the year shall be subject to re-election at
the next AGM to be held following his appointment. Directors over seventy years of age are required to submit themselves for re-appointment
annually in accordance with Section 129(6) of the Companies Act, 1965.
Board Committees
To assist the Board in discharging its duties, various Board Committees have been established. The functions and terms of reference are
clearly de?ned and, where applicable, comply with the recommendations of the Code.
The Audit Committee comprises four Independent Non-Executive Directors.
The Chairman of the Audit Committee would inform the Directors at Board meetings, of any salient matters raised at the Audit Committee
meetings and which require the Board’s notice or direction.
Further information on the composition, terms of reference and other information relating to the Audit Committee are set out on pages 131 to
134 of this Annual Report.
The Nomination Committee comprises three Non-Executive Directors, two of whom are independent namely:-
Chairman: Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
(Non-Executive Director)
Members: Datuk Alias bin Ali
(Independent Non-Executive Director)
Dato’ Fam Lee Ee
(Independent Non-Executive Director)
The primary responsibility of the Nomination Committee in accordance with its terms of reference is to assist the Board with the following
functions:-
• To assess and recommend new nominees for appointment to the Board and Board Committees (the ultimate decision as to whom shall
be nominated should be the responsibility of the full Board after considering the recommendations of such a Committee).
• To review the required mix skills and experience and other qualities, including core competencies which the Non-Executive Directors
should bring to the Board.
• To assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual Director.
STATEMENT
ON CORPORATE
GOVERNANCE
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
127
The Remuneration Committee comprises three Independent Non-Executive Directors namely:-
Chairman: Datuk Alias bin Ali
(Independent Non-Executive Director)
Members: Dato’ Leong Sonny @ Leong Khee Seong
(Independent Non-Executive Director)
Dato’ Fam Lee Ee
(Independent Non-Executive Director)
The primary responsibility of the Remuneration Committee in accordance with its terms of reference is to assist the Board with the following
functions:-
• To review and to consider the remuneration of Executive Directors which is in accordance with the skill, experience and expertise they
possess and make recommendation to the Board on the remuneration packages of Executive Directors.
• To provide an objective and independent assessment of the bene?ts granted to the Executive Directors.
• To conduct continued assessment of individual Executive Directors to ensure that remuneration is directly related to corporate and
individual performance.
• Annual review of the overall remuneration policy for Directors for recommendation to the Board.
The Safety Review Board was established in August 2005 with the purpose of providing Board level oversight and input to the management of
Safety within AirAsia’s operations. The Board appoints the Chairman of the Committee and a meeting is held each quarter to review progress
and trends in relation to Flight Safety & Airworthiness, Incident Reports, Investigations and recommendations and Flight Data Analysis and
Recommendations. The Committee comprises two Non-Executive Directors, namely:-
Chairman: Mr. Conor Mc Carthy
(Non-Executive Director)
Member: Dato’ Mohamed Khadar bin Merican
(Independent Non-Executive Director)
and the other members include relevant operations safety and security specialists from AirAsia and from our af?liates in Thailand and
Indonesia. A report is provided to Board each Quarter.
The Employee Share Option Scheme (“ESOS”) Committee comprises of the Group CEO, the Deputy Group Chief Executive Of?cer (“Deputy
Group CEO”), the Group Regional Head Finance and the Company’s External Legal Advisor. The ESOS Committee was established to
administer the ESOS of the Group in accordance with the objectives and regulations thereof and to determine the participation eligibility,
option offers and share allocations and to attend to such other matters as may be required.
B. DIRECTORS REMUNERATION
The remuneration package comprises the following elements:-
1. Fee
The fees payable to each of the Non-Executive Directors for their services on the Board are recommended by the Board for ?nal approval by
shareholders of the Company at the AGM.
2. Basic salary
The basic salary for each Executive Director is recommended by the Remuneration Committee and approved by the Board, taking into
account the performance of the individual, the in?ation price index and information from independent sources on the rates of salary for
similar positions in other comparable companies internationally. Salaries are reviewed annually.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
128
3. Bonus scheme
The Group operates a bonus scheme for all employees, including the Executive Directors. The criteria for the scheme are dependent on
various performance measures of the Group, together with an assessment of each individual’s performance during the period.
4. Bene?ts-in-kind
Other customary bene?ts (such as private medical care, car allowance, travel coupons, etc.) are made available as appropriate.
5. Service contract
Both the Group CEO and Deputy Group CEO, have a three-year service contract each with AirAsia.
6. Directors’ share options
There was no movement in Directors’ share options during the year ended 31 December 2010.
Details of the Directors’ remuneration are set out in Note 5 of the Audited Financial Statements on pages 173 to 174 of this Annual Report.
Whilst the Code has prescribed for individual disclosure packages, the Board is of the view that the transparency and accountability aspects of
Corporate Governance in respect of the Directors’ remuneration are appropriately and adequately addressed by the band disclosure as disclosed
in the said Note 5.
C. SHAREHOLDERS
Investor Relations
The Company is committed to maintaining good communications with shareholders and investors. Communication is facilitated by a number
of formal channels used to inform shareholders about the performance of the Group. These include the Annual Report and Accounts and
announcements made through Bursa Malaysia, as well as through the AGM.
Members of senior management are directly involved in investor relations through periodic roadshows and investor brie?ngs in the country and
abroad with ?nancial analysts, institutional shareholders and fund managers.
Reports, announcements and presentations given at appropriate intervals to representatives of the investment community are also available for
download at the Group’s website at www.airasia.com. Shareholders may obtain the Company’s announcements via the Bursa Malaysia’s website
at “http://www.bursamalaysia.com”.
Any queries or concerns regarding the Group may be directed to the Investor Relations Department at [email protected].
Annual General Meeting
Given the size and geographical diversity of our shareholder base, the AGM is another important forum for shareholder interaction. All
shareholders are noti?ed of the meeting together with a copy of the Group’s Annual Report at least 21 days before the meeting is held.
At the AGM, the Group CEO will conduct a brief presentation on the Group’s performance for the year and future prospects. The Chairman and
all Board Committee chairmen where possible will be present at the AGM to answer shareholders’ questions and hear their views during the
meeting. Shareholders are encouraged to participate in the proceedings and engage with dialogue with the Board and Senior Management.
Corporate Disclosure Policy
AirAsia Berhad observed the continuing disclosure obligation imposed upon a listed issuer by Bursa Malaysia. A Corporate Disclosure Policy
was approved by the Board, which provides accurate, balanced, clear, timely and complete disclosure of corporate information to enable
informed and orderly market decisions by investors. In this respect, the Company follows the disclosure guidelines and regulation of Bursa
Malaysia.
Material information will in all cases be disseminated via Bursa Malaysia and other means.
STATEMENT
ON CORPORATE
GOVERNANCE
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
129
D. ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board aims to ensure that the quarterly reports, annual audited fnancial statements as well as the annual review of operations in the
Annual Report re?ect full, fair and accurate recording and reporting of ?nancial and business information in accordance with the MMLR of
Bursa Malaysia.
The Directors are also required by the Companies Act, 1965 to prepare the Group’s annual audited fnancial statements with all material
disclosures such that they are complete, accurate and in conformance with applicable accounting standards and rules and regulations. The
Audit Committee assists the Board in overseeing the ?nancial reporting process.
Audit Committee and Internal Control
The Board’s governance policies include a process for the Board, through the Audit Committee to review regularly the effectiveness of the
system of internal control as required by the Code. A report on the Audit Committee and its terms of reference is presented on pages 131 to
134 of this Annual Report.
The Board has overall responsibility for the Group’s system of internal control, which comprises a process for identifying, evaluating and
managing the risks faced by the Group and for regularly reviewing its effectiveness in accordance with the Code.
The Board con?rms that this process was in place throughout the year under review and up to the date of approval of these ?nancial
statements. The primary aim is to operate a system which is appropriate to the business and which can, over time, increase shareholder
value whilst safeguarding the Group’s assets. The system is designed to manage, rather than eliminate, the risk of failure to achieve business
objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Statement of Internal Control is set out in pages 135 to 136.
Whistleblowing Program
In order to improve the overall organisational effectiveness and to uphold the integrity of the Company in the eyes of the public, the Company
has updated the whistleblowing program during the year which acts as a formal communication channel where all stakeholders can
communicate their concerns in cases where the Company’s business conduct is deemed to be contrary to the Company’s common values.
All concerns should be addressed to the Chief Audit Executive (Audit & Consulting Services) who will then assess all concerns reported and
recommend the appropriate action, and subsequently:
• Compile all reports received and submit to the Chairman of the Audit Committee; and
• Report to Management on behalf of the Audit Committee the results of the investigation for further action.
All details pertaining to the name and position of the whistleblower will be kept strictly con?dential throughout the investigation proceedings.
Relationship with the External Auditors
The Board, through the Audit Committee, has maintained appropriate, formal and transparent relationship with the external auditors. The
Audit Committee meets the external auditors without the presence of management, whenever necessary, and at least twice a year. Meetings
with the external auditors are held to further discuss the Group’s audit plans, audit ?ndings, ?nancial statements as well as to seek their
professional advice on other related matters. From time to time, the external auditors inform and update the Audit Committee on matters that
may require their attention.
This statement is made in accordance with a resolution of the Board of Directors of AirAsia dated 19 April 2011.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
130
AUDIT
COMMITTEE
REPORT
TERMS OF REFERENCE OF THE AUDIT COMMITTEE
A. COMPOSITION
The Committee shall comprise at least three non-executive directors appointed by the Board of Directors. All the members of the
Committee must be non-executive directors, with a majority of them being independent directors. All members of the Committee shall
be ?nancially literate and at least one member shall:
(i) be a member of the Malaysian Institute of Accountants; or
(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years of working experience and:-
• he must have passed the examinations specifed in Part I of the 1st Schedule of the Accountants Act 1967; or
• he must be a member of one of the associations of accountants specifed in Part II of the 1st Schedule of the Accountants
Act 1967; or
(iii) fulfls such other requirements as prescribed or approved by the Exchange.
The appointment terminates when a member ceases to be a Director. No alternate director can be appointed as a member of the
Committee.
Members of the Committee shall elect an Independent Director on the Committee as Chairman.
If a member of the Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is
reduced below three, the Board shall, within three months appoint such number of new members as may be required to make up the
minimum of three members.
The terms of of?ce and performance of the Committee and each of its members shall be reviewed by the Board at least once every
three years.
B. ROLES AND RESPONSIBILITY
The primary roles and responsibilities of the Committee with regards to the AirAsia Group’s Internal Audit function, external auditors,
?nancial reporting, related party transactions, annual reporting and investigation are as follows:
Internal Audit
• Mandate the internal audit function to report directly to the Committee;
• Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the
necessary independence and authority to carry out its work, which should be performed professionally and with impartiality and
pro?ciency;
• Review the internal audit reports and to ensure that appropriate and prompt remedial action is taken by the Management on
lapses in controls or procedures that are identi?ed by internal audit;
• Review the appraisal or assessment of the performance of members of the internal audit function;
• Approve the appointment or termination of the Regional Head - Internal Audit and senior staff members of Internal Audit;
• Take cognisance of resignations of internal audit staff and the reason for resigning.
PAGE >
131
AIRASIA BERHAD
ANNUAL REPORT
2010
External Auditor
• To consider the appointment of the external auditor, the audit fees, any questions of resignation or dismissal of the external auditor;
• To submit a copy of written representation or submission of external auditors’ resignation to the Exchange;
• Monitor the effectiveness of the external auditors’ performance and their independence and objectivity;
• To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where
more than one audit ?rm is involved;
• Review major fndings raised by the external auditors and Management’s responses, including the status of the previous audit
recommendations;
• To discuss problems and reservations arising from the interim and fnal audits, and any matter the external auditor may wish to discuss
(in the absence of management where necessary); and
• To provide a line of communication between the Board and the external auditors.
Financial Reporting
To review the quarterly and year-end fnancial statements of the Group and Company, focusing particularly on:-
• any change in accounting policies and practices;
• signifcant adjustments arising from the audit;
• litigation that could affect the results materially;
• the going concern assumption; and
• compliance with accounting standards and other legal requirements.
Related Party Transactions
To review any related party transactions and con?ict of interest situations that may arise within the Company or Group including
transactions, procedures or courses of conduct that may raise questions of Management’s integrity.
Annual Report
Report the Audit Committee’s activities for the ?nancial year.
Investigation
• To consider the major fndings of internal investigations and management’s response;
• To review the Company’s procedures for detecting fraud and whistle blowing and ensure that arrangements are in place by which staff
may, in con?dence, raise concerns about possible improprieties in matters of ?nancial reporting, ?nancial control or any other matters
(in compliance with provisions made in the Companies Act, 1965).
Other Matters
To consider any other matters as directed by the Board.
C. AUTHORITY AND POWERS OF THE AUDIT COMMITTEE
In carrying out its duties, an Audit Committee shall, at the cost of the Company:
• have authority to investigate any matter within its terms of reference;
• have full, free and unrestricted access to the Group and Company’s records, properties, personnel and other resources;
• have full and unrestricted access to any information regarding the Group and Company;
• have direct communication channels with the external auditors and person(s) carrying out the internal audit function;
• be able to obtain independent professional or other advice; and
• convene meetings with the external auditors, internal auditors or both, excluding the attendance of other directors and employees
of the Company, whenever deemed necessary.
Where the Committee is of the view that a matter reported by it to the Board of directors has not been satisfactorily resolved resulting
in a breach of the Main Market Listing Requirements of Bursa Malaysia, the Committee is authorised to promptly report such matters
to the Exchange.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
132
AUDIT
COMMITTEE
REPORT
D. MEETINGS
a) The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide.
b) The quorum for an Audit Committee Meeting shall be at least two (2) members. The majority present must be Independent
Directors.
c) The External Auditor has the right to appear and be heard at any meeting of the Committee and shall appear before the
Committee when required to do so.
d) The Group Regional Head of Finance and the Regional Head of Internal Audit of the Group and Company shall normally attend the
meetings to assist in the deliberations and resolution of matters raised. However, at least twice a year, the Committee shall meet
with the External Auditors without the presence of management.
e) The Company Secretary shall act as Secretary of the Committee and shall be responsible, with the concurrence of the Chairman,
for drawing up and circulating the agenda and the notice of meetings together with the supporting explanatory documentation to
members prior to each meeting.
f) The Secretary of the Committee shall be entrusted to record all proceedings and minutes of all meetings of the Committee.
g) In addition to the availability of detailed minutes of the Audit Committee Meetings to all Board members, the Committee at each
Board Meeting will report a summary of signi?cant matters resolutions.
The above terms of reference were revised and approved by the Board of Directors of AirAsia Berhad on 27th day of February 2008.
ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR
A summary of the activities performed by the Committee during the ?nancial year ended 31 December 2010 (“Financial Year”) is set out below.
Composition of the Audit Committee and Attendance of meetings
A total of seven (7) meetings are held for the Financial Year. The members of the Committee together with the details of their attendance at
the Committee meetings held during the year are as follows:
Name Directorship No. of Meetings attended
Datuk Leong Khee Seong (Chairman of the Committee) Independent Non-Executive Director 7
Dato’ Fam Lee Ee Independent Non-Executive Director 7
Datuk Alias bin Ali Independent Non-Executive Director 7
Dato’ Mohamed Khadar bin Merican Independent Non-Executive Director 6
The Committee meets on a scheduled basis at least once in every two months. The Group Chief Executive Of?cer (GCEO), the Regional
Head – Finance, the Group Financial Controller (GFC) and the Regional Head - Internal Audit are invited to attend the meetings. The External
Auditors are also invited to discuss their management letters, Audit Planning Memorandum and other matters deemed relevant.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
133
Internal Audit
• Approved the Group’s internal audit plan, scope and budget for the fnancial year.
• Reviewed the results of internal audit reports and monitor the implementation of management action plans in addressing and resolving
issues.
• Reviewed the adequacy and competencies of internal audit function to execute the annual audit plan.
External Audit
• The Committee reviewed PricewaterhouseCoopers (“PwC”) overall work plan and recommended to the Board their remuneration and
terms of engagement as external auditors and considered in detail the results of the audit, PwC’s performance and independence and
the effectiveness of the overall audit process. The Committee recommended PwC’s re-appointment as auditors to the Board and this
resolution will be put to shareholders at the AGM.
• Reviewed updates on the introduction of International Financial Reporting Standards and how they will impact the Company and has
monitored progress in meeting the new reporting requirements.
• The Committee was also updated by PwC on changes to the relevant guidelines on the regulatory and statutory requirements.
• Deliberated and reported the results of the annual audit to the Board of Directors.
• Met with the external auditor without the presence of management to discuss any matters that they may wish to present.
Employee Share Option Scheme
• The Committee verifed the allocation options pursuant to the criteria disclosed to the employees of the Group and established
pursuant to the Employee Share Option Scheme for the Financial Year.
Financial Reporting
• Reviewed and deliberated on the Quarterly Financial Announcements and Annual Audited Financial Statements prior to submission to
the Board of Directors for consideration and approval.
Related Party Transactions
• Reviewed the related party transactions entered into by AirAsia Berhad Group.
INTERNAL AUDIT FUNCTION
AirAsia Group has a well established in-house Internal Audit (IA) to assist the Board to oversee that Management has in place a sound risk
management, internal control and governance system. The IA maintains its impartiality, pro?ciency and due professional care by having
its plans and reports directly under the purview of the Committee. The function is also guided by its Audit Charter that provides for its
independence and re?ects the roles, responsibilities, accountability and scope of work of the department. The IA reports functionally to
Audit Committee and administratively to the GCEO.
The principal responsibility of IA is to undertake regular and systematic reviews of the systems of internal controls, so as to provide
reasonable assurance that the systems continue to operate ef?ciently and effectively. The IA implements risk based auditing in establishing
the strategic and annual audit plan, being the main factor in determining the areas or units to be audited.
The audits cover the review of the adequacy of risk management, the strength and effectiveness of the internal controls, compliance
to both internal and statutory requirement, governance and management effciency, amongst others. Areas for improvement and audit
recommendations are forwarded to the management for attention and further actions. The management is responsible to ensure that
corrective actions are implemented within the required time frame. The audit reports which provide the results of the audit conducted are
submitted to the Audit Committee for review. Key control issues and recommendations are highlighted to enable the Committee to execute
its oversight function.
The Audit Committee reviews and approves the IA’s human resource requirements to ensure that the function is adequately resourced with
competent and pro?cient internal auditors. The total operational costs of the Internal Audit department for 2010 was RM1,543,376.83.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
134
STATEMENT
ON INTERNAL
CONTROL
The Board remains committed to complying with the Malaysian Code of Corporate Governance
which “… requires listed companies to maintain a sound system of internal control to safeguard
shareholders’ investment and the Company’s assets” and Bursa Malaysia’s MMLR Paragraph 15.26 (b)
which requires the Board to make a statement about the state of internal control of the listed issuer as
a group. The Board is pleased to issue the following statement of internal control for the ?nancial year
ended 31 December 2010.
Board Accountability
The Company aims to achieve the highest standards of professional conduct and ethics, to raise the
bar on accountability and to govern itself in accordance to the relevant regulations and laws. To achieve
long term shareholder value through responsible and sustainable growth, the Company has established
and maintains an internal control environment that incorporates various control mechanisms at
different levels throughout the Company. The Board of Directors is responsible for reviewing the
effectiveness of these control mechanisms. Due to the limitations inherent in any such system, this is
designed to manage rather than eliminate risk and to provide reasonable but not absolute assurance
against material misstatement or loss.
The Group has in place an on-going process for identifying, evaluating, monitoring and managing
signi?cant risks that may materially affect the achievement of corporate objectives. This process has
been in place throughout the year and is regularly reviewed by the Board of Directors. Management is
responsible for assisting the Board implement policies and procedures on risk and control by identifying
and assessing the risks faced, and in the implementation of suitable remedial internal controls to
enhance operational controls and enhance risk management. Indeed, the ?rst level of assurance comes
from business operations which perform the day to day risk management activity. The Board is informed
of major control issues encompassing internal controls, regulatory compliance and risk taking.
The Board is of the view that the system of internal controls in place for the year under review is sound
and adequate to safeguard the shareholders’ investment, the interest of customers, regulators and
employees and the Group’s assets.
Integrating Risk Management with Internal Controls
The Board continues to rely on the enterprise-wide risk management framework to manage its risks and
to form the basis of the internal audit plan. Effective risk management is particularly challenging as
the Company operates in a rapidly changing environment. The process of risk management is ongoing
where the coverage includes the Group’s associated companies.
Risk pro?ling and assessments for all business divisions and associated companies have been
performed during the development of the annual audit plan which was presented, deliberated and
approved by the Audit Committee.
The Board relies signi?cantly on the Company’s internal auditors to carry out audits of the various
operating units based on the risk-based approved audit plan.
PAGE >
135
AIRASIA BERHAD
ANNUAL REPORT
2010
Key Internal Control Processes
The key elements of the Group’s internal control system are described below:
The Board and Operational Committees
• The Board has established an organisational structure with clearly defned lines of responsibilities, authority limits and accountability
aligned to business and operations requirements which support the maintenance of a strong control environment;
• The Board has established the Board Committees with clearly defned delegation of responsibilities within the defnition of terms of
reference and organisation structures. These committees include Remuneration Committee, Nomination Committee, Audit Committee
and Safety Review Board which have been set up to assist the Board to perform its oversight functions. The Committees have the
authority to examine all matters within their scope and report to the Board with their recommendations; and
• Operational committees have also been established with appropriate empowerment to ensure effective management and supervision
of the Group’s core business operations. These committees include the Financial Risk Committee, Quality and On-Time Performance
Committee where meetings are held frequently to address emerging issues, concerns and mitigation action plans.
Internal Audit
• The Board has extended the responsibilities of the Audit Committee to include the assessment of internal controls, through the Internal
Audit (IA) function. The Audit Committee, chaired by an independent non-executive director reviews the internal controls system and
?ndings of the internal auditors and external auditors;
• The IA is an independent function that reports directly to the Audit Committee. The IA assists the Committee and the Board by
performing regular and systematic review of the internal controls, ?nancial and accounting matters, operational policies and procedures,
and ensuring that internal controls are adequate to meet the Group’s requirements. Audits are carried out on all units and stations, the
frequency of which is determined by the level of risks assessed. The selection of auditable areas to be audited is based on risk based
audit methodology taking into consideration input of the senior management and the Board;
• Management is responsible for ensuring that corrective actions to address control weaknesses are implemented within a defned time
frame. The status of implementation is monitored through follow-up audits which are also reported to the Audit Committee;
• The conducts of internal audit work is governed by the Internal Audit Charter, which is approved by the Audit Committee. The Audit
Committee also reviews the adequacy of scope, functions, competency and resources of the internal audit functions and that it has the
necessary authority to carry out its work. The IA is also guided by the International Standards for the Professional Practice of Internal
Auditing set by the Institute of Internal Auditors; and
• The Audit Committee also reviews and considers matters relating to internal controls as highlighted by the external auditors in the
course of their statutory audit of the Company’s ?nancial statements.
Other Key Elements of Internal Control
• Policies and procedures of core business processes are documented in a series of in Standard Operating and implemented throughout
the Group. These policies and procedures are subject to regular reviews, updates and continuous improvements to re?ect the changing
risks and operational needs;
• Heads of Department present their annual budget, including fnancial and operating targets and capital expenditure plans for the
approval of the Group Chief Executive Of?cer. Group annual budget is prepared and tabled for Board approval. These budgets and
business plans are cascaded throughout the organisation to ensure effective execution and follow through. Actual performance is
compared against budget and reviewed by the Board; and
• The Company has implemented a formal performance appraisal system for all levels of employees.
The statement also caters for the state of internal controls in material joint ventures and associated companies. There was no material
loss incurred as a result of internal control weaknesses.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
136
STATEMENT
ON INTERNAL
CONTROL
ADDITIONAL
COMPLIANCE
INFORMATION
The information set out below is disclosed in
compliance with the MMLR of Bursa Malaysia:-
1. UTILISATION OF PROCEEDS FROM
CORPORATE PROPOSAL
There were no proceeds raised by the
Company from corporate proposals during the
?nancial year ended 31 December 2010.
2. SHARE BUY-BACK
The Company does not have a scheme to buy-
back its own shares.
3. OPTIONS, WARRANTS OR CONVERTIBLE
SECURITIES EXERCISED
The Company did not issue any warrants or
convertible securities during the ?nancial year
ended 31 December, 2010. The AirAsia ESOS
came into effect on 1 September 2004. The
details of the ESOS exercised are disclosed in
pages 201 to 202 of the ?nancial statements.
4. AMERICAN DEPOSITORY RECEIPT (“ADR”)
OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
PROGRAMME
The Company did not sponsor any ADR or GDR
programme during the ?nancial year ended
31 December 2010.
5. SANCTIONS AND/OR PENALTIES
There were no public sanctions and/or
penalties imposed on the Company and its
subsidiaries, Directors or Management by the
relevant regulatory bodies during the ?nancial
year ended 31 December 2010.
6. NON-AUDIT FEES
The amount of non-audit fees incurred for
services rendered to the Company by the
external auditors for the ?nancial year ended
31 December 2010 were RM1,354,000.00 for
Consultancy Services.
7. VARIATION IN RESULTS
There were no pro?t estimations, forecasts or
projections made or released by the Company
during the ?nancial year ended 31 December
2010.
8. PROFIT GUARANTEE
During the ?nancial year ended 31 December
2010, the Group and the Company did not give
any pro?t guarantee.
9. MATERIAL CONTRACTS INVOLVING
DIRECTORS’ AND MAJOR SHAREHOLDERS’
There were no material contracts entered into
by the Company and its subsidiaries involving
directors and major shareholders’ interests
still subsisting at the ?nancial year ended
31 December 2010.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
137
FINANCIAL
STATEMENTS
140 DIRECTORS’ REPORT
144 INCOME STATEMENTS
145 STATEMENTS OF COMPREHENSIVE INCOME
146 BALANCE SHEETS
148 STATEMENTS OF CHANGES IN EQUITY
150 CASH FLOW STATEMENTS
152 NOTES TO THE FINANCIAL STATEMENTS
217 STATEMENT BY DIRECTORS
217 STATUTORY DECLARATION
218 INDEPENDENT AUDITORS’ REPORT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
139
The Directors hereby submit their annual report to the members together with the audited financial statements of the Group and Company
for the financial year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are described
in Note 13 to the financial statements. There was no significant change in the nature of these activities during the financial year.
FINANCIAL RESULTS
Group Company
RM’000 RM’000
Net profit for the financial year 1,061,411 1,055,075
DIVIDENDS
No dividend has been paid by the Company since the end of the previous financial year.
The Directors now recommend the payment of a first and final dividend in respect of the financial year ended 31 December 2010 as
follows:
(i) Dividend of 0.91 sen less 25% tax per ordinary share of 10 sen each amounting to RM19,026,493;
(ii) Tax exempt dividend of 0.02 sen per ordinary share of 10 sen each amounting to RM527,627; and
(iii) Single-tiered dividend of 2.07 sen per ordinary share of 10 sen amounting to RM57,306,798.
The first and final dividend which is subject to the approval of members at the forthcoming Annual General Meeting of the Company, will be
paid to shareholders registered in the Register of Members at the close of business on 20 June 2011. Based on the issued and paid-up
capital of the Company as at the date of this report, the final dividend would amount to RM76,860,918.
RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.
ISSUANCE OF SHARES
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM275,774,458 to RM277,343,608 by
way of issuance of 15,691,500 ordinary shares of RM0.10 each pursuant to the exercise of the Company’s Employee Share Option Scheme
(“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM15,377,670, has been credited to
the Share Premium account.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.
There were no other changes in the issued and paid-up share capital of the Company during the financial year.
EMPLOYEE SHARE OPTION SCHEME (“ESOS”)
The Company implemented an ESOS on 1 September 2004. The ESOS is governed by the by-laws which were approved by the shareholders
on 7 June 2004 and was effective for a period of 5 years from the date of approval. On 28 May 2009, the Company extended the duration
of its ESOS which expired on 6 June 2009 by another 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws.
The ESOS extension was not subject to any regulatory or shareholders’ approval.
Details of the ESOS are set out in Note 31 to the financial statements.
DIRECTORS’
REPORT
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
140
EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONTINUED)
The Company has been granted an exemption by the Companies Commission of Malaysia, the information of which has been separately
filed, from having to disclose the list of option holders and their holdings, except for eligible employees (inclusive of Executive Directors) with
share options allocation of 320,000 and above. The employees who have been granted options of more than 320,000 shares are Dato’
Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin bin Meranun, details of which are disclosed in the section on Directors’ Interests in
Shares below.
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
Dato’ Sri Dr. Anthony Francis Fernandes
Dato’ Kamarudin bin Meranun
Conor Mc Carthy
Dato’ Leong Sonny @ Leong Khee Seong
Dato’ Fam Lee Ee
Datuk Alias bin Ali
Dato’ Mohamed Khadar bin Merican
Mohd Omar bin Mustapha (Appointed on 16 March 2011)
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object
or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate, other than the Company’s ESOS (see Note 5 to the financial statements).
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’ remuneration
as disclosed in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director
or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 37 to
the financial statements.
DIRECTORS’ INTERESTS IN SHARES
According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financial year in
shares and options over shares in the Company are as follows:
Number of ordinary shares of RM0.10 each
At At
1.1.2010 Acquired Disposed 31.12.2010
The Company
Direct interests
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010 – – 2,627,010
Dato’ Kamarudin bin Meranun 1,692,900 – – 1,692,900
Conor Mc Carthy 20,882,903 – 5,530,500 15,352,403**
Dato’ Leong Sonny @ Leong Khee Seong 100,000 – – 100,000
Dato’ Fam Lee Ee 200,000 – 100,000 100,000
Indirect interests
Dato’ Sri Dr. Anthony Francis Fernandes * 729,458,382 – – 729,458,382
Dato’ Kamarudin bin Meranun * 729,458,382 – – 729,458,382
* By virtue of their interests in shares in the substantial shareholder of the Company, Tune Air Sdn. Bhd. (“TASB”), Dato’ Sri Dr. Anthony
Francis Fernandes and Dato’ Kamarudin bin Meranun are deemed to have interests in the Company to the extent of TASB’s interest
therein, in accordance with Section 6A of the Companies Act, 1965.
** 100,000 shares held in personal name and 15,252,403 shares held under HSBC Nominees (Asing) Sdn Bhd.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
141
DIRECTORS’
REPORT
DIRECTORS’ INTERESTS IN SHARES (CONTINUED)
Number of options over ordinary shares of RM0.10 each
At At
1.1.2010 Granted Exercised 31.12.2010
The Company
Dato’ Sri Dr. Anthony Francis Fernandes 600,000 – – 600,000
Dato’ Kamarudin bin Meranun 600,000 – – 600,000
Other than as disclosed above, according to the register of Directors’ shareholdings, none of the other Directors in office at the end of the
financial year held any interest in shares, options over shares and debentures of the Company and its related corporations during the financial
year.
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts
and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts;
and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as
shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to
realise.
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements
of the Group and Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company
misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end
of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet their obligations as
and when they fall due.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
142
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and Company which has arisen since the end of the financial year which secures the liability of
any other person; or
(b) any contingent liability of the Group and Company which has arisen since the end of the financial year.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements
which would render any amount stated in the financial statements misleading.
In the opinion of the Directors:
(a) the results of the Group’s and Company’s operations during the financial year were not substantially affected by any item, transaction
or event of a material and unusual nature, other than those arising from the changes in accounting policy disclosed in Note 2 to the
financial statements; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a
material and unusual nature likely to affect substantially the results of the operations of the Group and Company for the financial year
in which this report is made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 28 April 2011.
DATO’ SRI DR. ANTHONY FRANCIS FERNANDES DATO’ KAMARUDIN BIN MERANUN
DIRECTOR DIRECTOR
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
143
INCOME
STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Revenue 4 3,948,095 3,132,901 3,864,459 3,072,049
Operating expenses
– Staff costs 5 (360,785) (306,002) (358,941) (304,551)
– Depreciation of property, plant and equipment 12 (519,984) (447,644) (519,958) (447,637)
– Aircraft fuel expenses (1,210,108) (927,795) (1,210,108) (927,795)
– Maintenance, overhaul, user charges and other
related expenses (476,077) (410,583) (476,077) (410,583)
– Aircraft operating lease expenses (65,692) (107,251) (65,692) (107,251)
– Travel and tour operating expenses (69,634) (53,524) – –
– Gain on unwinding of derivatives – 22,457 – 22,457
– Other operating expenses 6 (192,381) (92,188) (186,017) (90,543)
Other losses – net 7 (22,416) – (22,416) –
Other income 8 35,943 102,383 35,367 102,383
Operating profit 1,066,961 912,754 1,060,617 908,529
Finance income 9 808,033 84,505 808,023 84,462
Finance costs 9 (776,138) (374,971) (776,134) (374,971)
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Taxation
– Current taxation 10 (5,431) (11,186) (5,417) (11,186)
– Deferred taxation 10 (32,014) (104,835) (32,014) (104,835)
(37,445) (116,021) (37,431) (116,021)
Net profit for the financial year 1,061,411 506,267 1,055,075 501,999
Earnings per share (sen)
– Basic 11 38.4 20.6
– Diluted 11 38.3 20.6
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
144
STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Profit for the financial year 1,061,411 506,267 1,055,075 501,999
Other comprehensive (loss)/income
– Available-for-sale financial assets 16 4,279 – 4,279 –
– Cash flow hedges (5,639) – (5,639) –
– Foreign currency translation differences (107) – – –
Other comprehensive loss for the financial year, net of tax (1,467) – (1,360) –
Total comprehensive income for the financial year 1,059,944 506,267 1,053,715 501,999
Total comprehensive income attributable to:
– Equity holders of the company 1,059,944 506,267
– Minority interests – –
1,059,944 506,267
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
145
BALANCE
SHEETS
AS AT 31 DECEMBER 2010
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
NON-CURRENT ASSETS
Property, plant and equipment 12 9,318,041 7,942,188 9,316,592 7,941,293
Investment in subsidiaries 13 – – 25,384 22,194
Investment in associates 15 29 29 29 29
Available-for-sale financial assets 16 152,942 – 152,942 –
Other investments 17 25 26,704 25 26,704
Goodwill 18 8,738 8,738 – –
Deferred tax assets 19 719,260 751,274 719,260 751,274
Receivables and prepayments 20 23,593 23,593 23,593 23,593
Amount due from a jointly controlled entity 21 – 171,885 – 171,885
Amount due from an associate 22 117,964 253,037 117,964 253,037
Derivative financial instruments 30 25,544 – 25,544 –
10,366,136 9,177,448 10,381,333 9,190,009
CURRENT ASSETS
Inventories 23 17,553 20,864 17,005 20,316
Receivables and prepayments 20 841,122 721,082 815,921 719,608
Deposits on aircraft purchase 248,684 330,978 248,684 330,978
Amounts due from subsidiaries 24 – – 432,382 197,626
Amount due from a jointly controlled entity 21 99,802 194,503 – –
Amounts due from associates 22 162,386 203,930 162,386 203,930
Amount due from a related party 24 – 3,303 – 3,303
Deposits, cash and bank balances 25 1,504,617 746,312 1,499,061 745,345
2,874,164 2,220,972 3,175,439 2,221,106
LESS: CURRENT LIABILITIES
Trade and other payables 26 912,943 872,990 884,344 861,847
Sales in advance 328,549 283,224 307,987 272,333
Amounts due to subsidiaries 27 – – 44,251 29,055
Amount due to a jointly controlled entity 21 – – 322,614 –
Amount due to an associate 22 5,223 3,382 5,223 3,382
Amount due to a related party 27 41,262 – 41,262 –
Hire-purchase payables 28 15 56 15 56
Borrowings 29 553,967 540,212 553,967 540,212
Current tax liabilities 1,632 9,824 955 9,824
1,843,591 1,709,688 2,160,618 1,716,709
NET CURRENT ASSETS 1,030,573 511,284 1,014,821 504,397
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
146
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
NON-CURRENT LIABILITIES
Hire-purchase payables 28 – 16 – 16
Borrowings 29 7,302,884 7,067,696 7,302,884 7,067,696
Derivative financial instruments 30 452,865 – 452,865 –
7,755,749 7,067,712 7,755,749 7,067,712
3,640,960 2,621,020 3,640,405 2,626,694
CAPITAL AND RESERVES
Share capital 31 277,344 275,774 277,344 275,774
Share premium 1,221,594 1,206,216 1,221,594 1,206,216
Foreign exchange reserve 485 592 – –
Retained earnings 32 2,102,571 1,138,438 2,102,501 1,144,704
Other reserves 38,966 – 38,966 –
Shareholders’ equity 3,640,960 2,621,020 3,640,405 2,626,694
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
147
STATEMENTS OF
CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Attributable to equity holders of the Company
Issued and fully paid
ordinary shares
of RM0.10 each
Foreign Cash flow
Number Nominal Share exchange hedge AFS Retained Minority Total
Note of shares value premium reserve reserve reserve earnings Total interests equity
‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
At 1 January 2009 2,374,210 237,421 735,352 592 – – 632,171 1,605,536 – 1,605,536
Net profit for the financial year – – – – – – 506,267 506,267 – 506,267
Issuance of ordinary shares
– issue of shares 31 380,000 38,000 467,400 – – – – 505,400 – 505,400
– pursuant to the
Employee Share
Option Scheme (‘ESOS’) 31 3,535 353 3,464 – – – – 3,817 – 3,817
At 31 December 2009 2,757,745 275,774 1,206,216 592 – – 1,138,438 2,621,020 – 2,621,020
At 1 January 2010 2,757,745 275,774 1,206,216 592 – – 1,138,438 2,621,020 – 2,621,020
Effects of adoption
of FRS 139 40 – – – – (65,670) 105,996 (97,278) (56,952) – (56,952)
At 1 January 2010 (restated) 2,757,745 275,774 1,206,216 592 (66,670) 105,996 1,041,160 2,564,068 – 2,564,068
Net profit for the financial year – – – – – – 1,061,411 1,061,411 – 1,061,411
Other comprehensive income – – – (107) (5,639) 4,279 – (1,467) – (1,467)
Total comprehensive income – – – (107) (5,639) 4,279 1,061,411 1,059,944 – 1,059,944
Issuance of ordinary shares
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 15,692 1,570 15,378 – – – – 16,948 – 16,948
At 31 December 2010 2,773,437 277,344 1,221,594 485 (71,309) 110,275 2,102,571 3,640,960 – 3,640,960
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
148
Issued and fully paid
ordinary shares
of RM0.10 each Non-distributable Distributable
Cash flow
Number Nominal hedge AFS Share Retained
Note of shares value reserve reserve premium earnings Total
‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
At 1 January 2009 2,374,210 237,421 – – 735,352 642,705 1,615,478
Net loss for the financial year – – – – – 501,999 501,999
Issuance of shares
– issue of shares 31 380,000 38,000 – – 467,400 – 505,400
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 3,535 353 – – 3,464 – 3,817
At 31 December 2009 2,757,745 275,774 – – 1,206,216 1,144,704 2,626,694
At 1 January 2010 2,757,745 275,774 – – 1,206,216 1,144,704 2,626,694
Effects of adoption of FRS 139 40 – – (65,670) 105,996 – (97,278) (56,952)
At 1 January 2010 (restated) 2,757,745 275,774 (65,670) 105,996 1,206,216 1,047,426 2,569,742
Net profit for the financial year – – – – – 1,055,075 1,055,075
Other comprehensive income – – (5,639) 4,279 – – (1,360)
Total comprehensive income – – (5,639) 4,279 – 1,055,075 1,053,715
Issuance of shares
– pursuant to the Employee
Share Option Scheme
(‘ESOS’) 31 15,692 1,570 – – 15,378 – 16,948
At 31 December 2010 2,773,437 277,344 (71,309) 110,275 1,221,594 2,102,501 3,640,405
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
149
CASH FLOW
STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Adjustments:
Property, plant and equipment
– Depreciation 519,984 447,644 519,958 447,637
– Impairment 6,996 – 6,996 –
– Write off – 388 – 388
– Gain on disposals (1,311) (30,696) (1,311) (30,696)
Amortisation of long term prepayments 24,741 9,645 24,741 9,645
Amortisation of other investments 12 11 12 11
Unwinding of discount on intercompany receivables (9,647) – (9,647) –
Fair value losses on derivative financial instruments 295,028 – 295,028 –
Net unrealised foreign exchange gain (586,755) (39,742) (586,760) (39,742)
Interest expense 374,364 371,153 374,364 371,153
Interest income (66,699) (6,300) (66,689) (6,257)
1,655,569 1,374,391 1,649,198 1,370,159
Changes in working capital:
Inventories 3,311 (180) 3,311 (179)
Receivables and prepayments (162,883) (28,438) (139,046) (28,869)
Trade and other payables 63,453 77,701 35,177 69,716
Intercompany balances 393,568 (166,457) 401,920 (155,435)
Cash generated from operations 1,953,018 1,257,017 1,950,560 1,255,392
Interest paid (379,099) (322,407) (379,099) (322,407)
Utilisation of provision for loss on unwinding of derivatives – (151,713) – (151,713)
Interest received 57,052 6,300 57,042 6,257
Tax paid (11,808) (5,578) (11,319) (5,578)
Net cash from operating activities 1,619,163 783,619 1,617,184 781,951
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
150
Group Company
Note 2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment
– Additions (1,902,833) (1,947,763) (1,902,253) (1,947,746)
– Proceeds from disposals – 182,538 – 182,538
Investment in a subsidiary company – – (3,190) –
Deposits on lease of aircraft 50,808 (12,243) 50,808 (12,243)
Purchases of available-for-sale financial assets (16,000) – (16,000) –
Net cash used in investing activities (1,868,025) (1,777,468) (1,870,635) (1,777,451)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from allotment of shares 16,948 509,217 16,948 509,217
Hire-purchase instalments paid (57) (77) (57) (77)
Proceeds from borrowings 1,562,856 1,670,390 1,562,856 1,670,390
Repayment of borrowings (572,580) (593,131) (572,580) (593,131)
Deposits (pledged)/released as securities (942) 5,112 (942) 5,112
Net cash from financing activities 1,006,225 1,591,511 1,006,225 1,591,511
NET INCREASE FOR THE FINANCIAL YEAR 757,363 597,662 752,774 596,011
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE FINANCIAL YEAR 718,465 120,803 717,498 121,487
CASH AND CASH EQUIVALENTS
AT END OF THE FINANCIAL YEAR 25 1,475,828 718,465 1,470,272 717,498
The notes on pages 152 to 216 form part of these financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
151
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
1 GENERAL INFORMATION
The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are
described in Note 13 to the financial statements. There was no significant change in the nature of these activities during the financial
year.
The address of the registered office of the Company is as follows:
25-5, Block H
Jalan PJU1/37, Dataran Prima
47301 Petaling Jaya
Selangor Darul Ehsan
The address of the principal place of business of the Company is as follows:
LCC Terminal
Jalan KLIA S3
Southern Support Zone
KL International Airport
64000 Sepang
Selangor Darul Ehsan
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 28 April 2011.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered
material in relation to the financial statements:
(a) Basis of preparation of the financial statements
The financial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards
(‘FRSs’), the Malaysian Accounting Standards Board (‘MASB’) approved accounting standards in Malaysia for Entities Other than
Private Entities, and comply with the provisions of the Companies Act, 1965.
The financial statements of the Group and Company have been prepared under the historical cost convention except as disclosed
in the accounting policies below.
The preparation of financial statements in conformity with FRSs and the provisions of the Companies Act, 1965 requires the use of
certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses
during the reported financial year. It also requires Directors to exercise their judgment in the process of applying the Group’s
accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of current events and
actions, actual results may differ.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the
Group’s and the Company’s financial statements are disclosed in Note 3 to the financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
152
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
Standards, amendments to published standards and interpretations that are effective
The new accounting standards, amendments and improvements to published standards and interpretations that are effective for
the Group and Company’s financial year beginning on or after 1 January 2010 are as follows:
• FRS 4 “Insurance Contract”
• FRS 7 “Financial Instruments: Disclosures” and the related Amendments
• FRS 8 “Operating Segments”
• FRS 101 (revised) “Presentation of Financial Statements”
• FRS 123 “Borrowing Costs”
• FRS 139 “Financial Instruments: Recognition and Measurement” and the related Amendments
• Amendment to FRS 1 “First-time Adoption of Financial Reporting Standards” and FRS 127 “Consolidated and Separate
Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate”
• Amendment to FRS 2 “Share-based Payment: Vesting Conditions and Cancellations”
• Amendments to FRS 132 “Financial Instruments: Presentation” and FRS 101 (revised) “Presentation of Financial Statements”
- Puttable financial instruments and obligations arising on liquidation
• IC Interpretation 9 “Reassessment of Embedded Derivatives” and the related Amendments
• IC Interpretation 10 “Interim Financial Reporting and Impairment”
• IC Interpretation 11 “FRS 2 Group and Treasury Share Transactions”
• IC Interpretation 13 “Customer Loyalty Programmes”
• IC Interpretation 14 “FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction”
• Improvements to FRSs (2009)
The adoption of these new FRSs, amendments and interpretations do not have any effect on the financial performance or financial
position of the Group and Company except for those discussed below.
(i) Revised FRS 101 “Presentation of Financial Statements”
The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in
the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in
equity in a statement of comprehensive income which can be presented as a single statement or two statements (comprising
the income statement and statement of comprehensive income). The Group has elected to present the statement of
comprehensive income in two statements. As a result, the Group has presented all owner changes in equity in the consolidated
statement of changes in equity whilst all non-owner changes in equity have been presented in the consolidated statement
of comprehensive income. There is no impact on the earnings per share since these changes affect only the presentation of
items of income and expenses.
(ii) FRS 7 “Financial Instruments : Disclosures”
Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS
132 “Financial Instruments : Disclosure and Presentation”. FRS 7 introduces new disclosures to improve the information
about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks
arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk,
including sensitivity analysis to market risk.
The Group and the Company have applied FRS 7 prospectively in accordance with the transition provisions. Hence, the new
disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the
Company’s financial statements for the financial year ended 31 December 2010. As the adoption of this new accounting
standard only results in additional disclosures, there is no impact on earnings per share.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
153
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iii) FRS 8 “Operating Segments”
FRS 8 requires segment information to be presented on a similar basis to that used for internal reporting purposes. As a
result, the Group’s segmental reporting had been presented based on the internal reporting to the chief operating decision
maker who makes decisions on the allocation of resources and assesses the performance of the reportable segments. This
standard does not have any impact on the financial position and results of the Group. The required disclosures are shown in
Note 36 to the financial statements.
(iv) FRS 139 “Financial Instruments: Recognition and Measurement”
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to
buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in
accordance with the transitional provisions.
The adoption of FRS 139 has resulted in several changes to accounting policies relating to recognition and measurement
of financial instruments. Comparatives for financial instruments have not been adjusted and therefore the corresponding
balances are not comparable. Significant changes in accounting policies are as follows:
(i) Investments
Non-current investments, previously measured at cost and subject to impairment, are now classified as available-for-sale
financial assets. These are initially measured (a) at fair value plus transaction costs and subsequently at fair value or
(b) unless fair value cannot be reliably measured due to the variability in the range of reasonable fair value estimates
is significant for that investment or the probabilities of the various estimates within the range cannot be reasonably
assessed and used in estimating fair value; in such case, they are measured at cost less impairment losses. They
are included in non-current assets unless management intends to dispose of the investment within 12 months of the
reporting date.
Changes in fair values of available-for-sale equity securities are recognised in other comprehensive income, together with
the related currency translation differences. A significant or prolonged decline in the fair value of the security below its
cost is considered as an indicator that the asset is impaired. If any such evidence exists, the cumulative loss, measured
as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised
in the income statement, is removed from equity and recognised in the income statement. Impairment losses recognised
in the income statement on equity instruments classified as available-for-sale are reversed through other comprehensive
income and not through the income statement.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other
comprehensive income are included in the income statement. Refer to Note 40 for the impact of this change in accounting
policy.
(ii) Derivatives
Prior to 1 January 2011, derivative financial instruments were not recognised in the financial statements on inception.
With the adoption of FRS 139, derivative financial instruments are initially recognised at fair value at the date the
derivative contract is entered into and are subsequently remeasured at their fair values.
The Group has applied the new policy according to the transitional provisions by recognising and measuring derivatives,
as appropriate, and recording any adjustments to the previous carrying amounts to the opening retained earnings or, if
appropriate, another category of equity, of the current financial year. The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a hedging instrument (see accounting policy Note 2(l)). Refer to Note
40 for the impact of this change in accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
154
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iv) FRS 139 “Financial Instruments: Recognition and Measurement” (continued)
(iii) Intercompany loans
During the current and prior years, the Company granted interest-free loans and advances to its subsidiaries. Prior to
1 January 2010, these loans and advances were recorded at cost in the Company’s financial statements. Upon the
adoption of FRS 139, the interest-free loans or advances are recorded initially at a fair value that is lower than cost. The
difference between the fair value and cost of the loan or advance is recognised as adjustments to the opening balance
of retained earnings. Subsequent to initial recognition, the loans and advances are measured at amortised cost. Refer
to Note 40 for the impact of this change in accounting policy.
(iv) Loans and receivables
Non-current receivables, previously measured at invoiced amount and subject to impairment, are now classified as loans
and receivables and measured at fair value plus transaction costs initially and subsequently, at amortised cost using the
effective interest method.
When loans and receivables are impaired, the carrying amount of the asset is reduced and the amount of the loss
is recognised in the income statement. Impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the asset’s original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the
reversal of the previously recognised impairment loss is recognised in the income statement.
Prior to 1 January 2010, the Group also stated its other non-current financial liabilities at undiscounted amount payable.
With the adoption of FRS 139, these financial liabilities are initially measured at fair value and subsequently at amortised
cost using the effective interest rate method.
In accordance with the transitional provisions for the first time adoption of FRS 139, the above changes in accounting
policy have been accounted for prospectively and the comparatives as at 31 December 2009 are not restated. Refer to
Note 40 for the impact of this change in accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
155
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
(iv) FRS 139 “Financial Instruments: Recognition and Measurement” (continued)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group
and Company but not yet effective and have not been early adopted
The following new and revised standards, interpretations and amendments to standards have been published and are
mandatory for the Group’s accounting periods beginning on or after 1 January 2011 or later periods, but the Group has not
early adopted them:
– The revised FRS 3 “Business combinations” (effective prospectively for accounting period beginning 1 July 2010)
continues to apply the acquisition method to business combinations, with some significant changes. For example, all
payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments
classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-
acquisition basis to measure the minority interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply
FRS 3 (revised) prospectively to all business combinations from 1 January 2011.
– The revised FRS 124 “Related party disclosures” (effective from 1 January 2012) removes the exemption to disclose
transactions between government-related entities and the government, and all other government-related entities. The
following new disclosures are now required for government related entities:
– The name of the government and the nature of their relationship;
– The nature and amount of each individually significant transactions; and
– The extent of any collectively significant transactions, qualitatively or quantitatively.
This standard is not expected to have a material impact on the earnings per share since these changes only result in
additional disclosures.
– The revised FRS 127 “Consolidated and separate financial statements” (applies prospectively to transactions with non-
controlling interests from 1 July 2010) requires the effects of all transactions with non-controlling interests to be recorded in
equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. When this
standard is effective, all earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest,
even if the attribution of losses to the non-controlling interest results in a debit balance in the shareholders’ equity. Profit
or loss attribution to non-controlling interests for prior years is not restated. The standard also specifies the accounting
when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in
the income statement. The Group will apply FRS 127 (revised) prospectively to transactions with minority interests from 1
January 2011. This standard is not expected to have a material impact on the Group’s financial statements.
– Amendments to FRS 7 “Financial instruments : Improving Disclosures” and FRS 1 “First-time adoption of financial reporting
standards” (effective from 1 January 2011) requires enhanced disclosures about fair value measurements and liquidity
risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement
hierarchy. The Group and Company will apply Amendments to FRS 7 from 1 January 2011. This standard is not expected
to have a material impact on earnings per share since these changes only result in additional disclosures.
– Amendments to FRS 132 “Financial instruments : Presentation” on classification of rights issue (effective from 1 March
2010) addresses accounting for rights issues that are denominated in currency other than the functional currency of the
issuer. Provided certain conditions are met, such rights issues are now classified as equity instruments instead of as
derivative liabilities, regardless of the currency in which the exercise price is denominated. The Group and Company will
apply Amendments to FRS 132 “Classification of Rights Issues” prospectively from 1 January 2011. This standard is not
expected to have a material impact on the Group’s and Company’s financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
156
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
Company but not yet effective and have not been early adopted (continued)
– IC Interpretation 15 “Agreements for construction of real estates” (effective from 1 January 2012) supersedes FRS 201 “Property
development activities” and clarifies that property development activities are sale of goods, instead of construction contracts.
IC Interpretation 15 will result in a change in accounting policy for revenue recognition for property development activities of the
Group from percentage of completion method to completion method where revenue can only be recognised when the Group has
transferred control and the significant risks and rewards of ownership of the completed properties to the buyer.
– IC Interpretation 16 “Hedges of a net investment in a foreign operation” (effective from 1 July 2010) clarifies the accounting
treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences
in functional currency, not presentation currency, and hedging instruments may be held by any entity in the Group. The
requirements of FRS 121 “The effects of changes in foreign exchange rates” do apply to the hedged item. This IC is not
expected to have a material impact on the Group’s and Company’s financial statements.
– IC Interpretation 17 “Distribution of non-cash assets to owners” (effective from 1 July 2010) provides guidance on accounting
for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as
dividends. FRS 5 has also been amended to require that assets are classified as held for distribution only when they are
available for distribution in their present condition and the distribution is highly probable. This IC is not expected to have a
material impact on the Group’s or Company’s financial statements.
– IC Interpretation 18 “Transfers of assets from customers” (effective prospectively for assets received on or after 1 January
2011) provides guidance where an entity receives from a customer an item of property, plant and equipment (or cash to
acquire such an asset) that the entity must then use to connect the customer to a network or to provide the customer with
services. Where the transferred item meets the definition of an asset, the asset is recognised as an item of property, plant
and equipment at its fair value. Revenue is recognised for each separate service performed in accordance with the recognition
criteria of FRS 118 “Revenue”. The Group and Company will apply this IC Interpretation prospectively from 1 January 2011.
This IC is not expected to have a material impact on the Group’s or Company’s financial statements.
– IC Interpretation 19 “Extinguishing financial liabilities with equity instruments” (effective from 1 July 2011) provides clarification
when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s
shares or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between
the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in the
income statement. Entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity
with no gain or loss recognised in the income statement. This IC is not expected to have a material impact on the Group’s or
Company’s financial statements.
– Amendments to IC Interpretation 14 “FRS 119 - The limit on a defined benefit assets, minimum funding requirements and their
interaction” (effective from 1 July 2011) permits an entity to recognise the prepayments of contributions as an asset, rather
than an expense in circumstances when the entity is subject to a minimum funding requirement and makes an early payment
of contributions to meet those requirements. This IC is not expected to have a material impact on Group’s or Company’s
financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
157
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation of the financial statements (continued)
The following amendments are part of the MASB’s improvements project that are relevant and effective for annual periods beginning
on or after 1 July 2010
Improvements to FRSs:
– FRS 2 (effective from 1 July 2010) clarifies that contributions of a business on formation of a joint venture and common control
transactions are outside the scope of FRS 2.
– FRS 3 (effective from 1 January 2011)
– Clarifies that the choice of measuring non-controlling interests at fair value or at the proportionate share of the
acquiree’s net assets applies only to instruments that represent present ownership interests and entitle their holders to
a proportionate share of the net assets in the event of liquidation. All other components of non-controlling interest are
measured at fair value unless another measurement basis is required by FRS.
– Clarifies that the amendments to FRS 7, FRS 132 and FRS 139 that eliminate the exemption for contingent consideration,
do not apply to contingent consideration that arose from business combinations whose acquisition dates precede the
application of FRS 3 (2010). Those contingent consideration arrangements are to be accounted for in accordance with
the guidance in FRS 3 (2005).
– FRS 5 “Non-current asset held for sale and discontinued operations” (effective from 1 July 2010) clarifies that all of a
subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control.
Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met.
– FRS 101 “Presentation of financial statements” (effective from 1 January 2011) clarifies that an entity shall present an
analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the
notes to the financial statements.
– FRS 138 “Intangible Assets” (effective from 1 July 2010) clarifies that a group of complementary intangible assets acquired
in a business combination may be recognised as a single asset if each asset has similar useful lives.
– IC Interpretation 9 (effective from 1 July 2010) clarifies that this interpretation does not apply to embedded derivatives in
contracts acquired in a business combination, businesses under common control or the formation of a joint venture.
The above mentioned Improvement to FRSs are not expected to have any material impact on the Group’s and Company’s
financial statements.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
158
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Group accounting
(i) Subsidiaries
Subsidiaries are those corporations or other entities (including special purpose entities) in which the Group has power to
exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying
a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries
are fully consolidated from the date on which control is transferred to the Group and are excluded from consolidation from
the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is recorded as
goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the
difference is recognised directly in the consolidated income statement (see Note 2(c) on goodwill).
Minority interests represent that portion of the profit or loss and net assets of subsidiaries attributable to equity interest that
are not owned, directly or indirectly through the subsidiaries, by the parent. It is measured at the minorities’ share of the fair
values of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in
subsidiaries’ equity since that date. Separate disclosure is made of minority interests.
Intragroup transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the accounting policies
adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group’s share of the
subsidiary’s net assets as of the date of disposal, including the cumulative amount of any exchange differences that relate to
that subsidiary which were previously recognised in equity, and is recognised in the consolidated income statement.
(ii) Jointly controlled entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing
of control by the Group with one or more parties where the strategic financial and operation decisions relating to the entity
requires unanimous consent of the parties sharing control.
The Group’s interest in jointly controlled entities is accounted for in the consolidated financial statements using the equity
method of accounting as described in Note 2(b)(iii).
The Group’s share of its jointly controlled entities’ post-acquisition profits or losses is recognised in the consolidated income
statement, and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investments. When the Group’s share of losses in
jointly controlled entities equals or exceeds its interest in the jointly controlled entities, including any other long-term interests
that, in substance, form part of the Group’s net investment in those entities, the Group discontinues recognising its share of
further losses.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
159
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Group accounting (continued)
(ii) Jointly controlled entities (continued)
After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entities. If
the jointly controlled entities subsequently report profits, the Group resumes recognising its share of those profits only after
its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the
Group’s interest in the jointly controlled entities; unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Where necessary, in applying the equity method, appropriate adjustments
are made to the financial statements of the jointly controlled entities to ensure consistency of accounting policies with those
of the Group.
(iii) Associates
Associates are corporations, partnerships or other entities in which the Group exercises significant influence but which it does
not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the
power to participate in the financial and operating policy decisions of the associates but not control over those policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.
Equity accounting is discontinued when the Group ceases to have significant influence over the associates. The Group’s
investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss (see Note 2(c)).
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated income statement,
and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investments. When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including any other long-term interests that, in substance, form part of the
Group’s net investment in the associate, the Group discontinues recognising its share of further losses.
After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate
subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals
the share of losses not recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Where necessary, in applying the equity method, appropriate adjustments are made to the financial statements
of the associates to ensure consistency of accounting policies with those of the Group.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
160
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries over the Group’s share of the fair value of the identifiable
net assets including contingent liabilities of subsidiaries at the date of acquisition.
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment at least annually, or when events
or circumstances occur indicating that an impairment may exist. Impairment of goodwill is charged to the consolidated income
statement as and when it arises. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity disposed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each cash-generating unit or a group of cash-
generating units represents the lowest level within the Group at which goodwill is monitored for internal management purposes and
which are expected to benefit from the synergies of the combination.
Goodwill on acquisition of jointly controlled entities and associates is included in the investments in jointly controlled entities and
associates respectively. Such goodwill is tested for impairment as part of the overall investment amount.
(d) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation
is calculated using the straight-line method to write-off the cost of the assets to their residual values over their estimated useful
lives. The useful lives for this purpose are as follows:
Aircraft
– engines 7 or 25 years
– airframe 7 or 25 years
– service potential 7 or 13 years
Aircraft spares 10 years
Aircraft fixtures and fittings Useful life of aircraft or remaining lease term of aircraft,
whichever is shorter
Buildings
– simulator 28.75 years
– hangar 50 years
Motor vehicles 5 years
Office equipment, furniture and fittings 5 years
Office renovation 5 years
Simulator equipment 25 years
Operating plant and ground equipment 5 years
Kitchen equipment 5 years
In flight equipment 5 years
Training equipment 5 years
Assets not yet in operation are stated at cost and are not depreciated until the assets are ready for their intended use.
Residual values, where applicable, are reviewed annually against prevailing market rates at the balance sheet date for equivalent
aged assets and depreciation rates are adjusted accordingly on a prospective basis. For the current financial year ended 31
December 2010, the estimated residual value for aircraft airframes and engines is 10% of their cost.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
161
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Property, plant and equipment (continued)
An element of the cost of an acquired aircraft is attributed on acquisition to its service potential, reflecting the maintenance
condition of its engines and airframe. This cost, which can equate to a substantial element of the total aircraft cost, is amortised
over the shorter of the period to the next checks or the remaining life of the aircraft.
The cost of subsequent major airframe and engine maintenance checks as well as upgrades to leased assets are capitalised and
amortised over the shorter of the period to the next check or the remaining life of the aircraft.
At each balance sheet date, the Group assesses whether there is any indication of impairment. If such an indication exists, an
analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying
amount exceeds the recoverable amount. See accounting policy Note 2(f) on impairment of assets.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income
statement.
Advance payments and option payments made in respect of aircraft purchase commitments and options to acquire aircraft where
the balance is expected to be funded by mortgage financing are recorded at cost. On acquisition of the related aircraft, these
payments are included as part of the cost of aircraft and are depreciated from that date.
(e) Investments
Investments in subsidiaries, jointly controlled entities and associates are stated at cost less accumulated impairment losses.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount (see Note 2(f)).
(f) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually, or as and when
events or circumstances occur indicating that an impairment may exist. Property, plant and equipment and other non-current
assets, including intangible assets with definite useful lives, are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less cost to sell and value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there
is separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed
for possible reversal at each reporting date.
Any impairment loss arising is charged to the income statement unless it reverses a previous revaluation in which case it is
charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless
it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.
(g) Maintenance and overhaul
Owned aircraft
The accounting for the cost of providing major airframe and certain engine maintenance checks for own aircraft is described in the
accounting policy for property, plant and equipment.
Leased aircraft
Where the Group has a commitment to maintain aircraft held under operating leases, provision is made during the lease term for
the rectification obligations contained within the lease agreements. The provisions are based on estimated future costs of major
airframe, certain engine maintenance checks and one-off costs incurred at the end of the lease by making appropriate charges to
the income statement calculated by reference to the number of hours or cycles operated during the financial year.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
162
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Leases
Finance leases
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are
classified as finance leases.
Finance leases are capitalised at the estimated present value of the underlying lease payments at the date of inception. Each lease
payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the balance
outstanding. The corresponding rental obligations, net of finance charges, are included in payables. The interest element of the
finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period.
Property, plant and equipment acquired under finance lease contracts are depreciated over the estimated useful life of the asset,
in accordance with the annual rates stated in Note 2(d) above. Where there is no reasonable certainty that the ownership will be
transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life.
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of incentives received from the lessor) are charged to the income
statement on a straight-line basis over the lease period.
Assets leased out by the Company under operating leases are included in property, plant and equipment in the balance sheet. They
are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental
income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.
(i) Inventories
Inventories comprising spares and consumables used internally for repairs and maintenance are stated at the lower of cost and
net realisable value.
Cost is determined on the weighted average basis, and comprises the purchase price and incidentals incurred in bringing the
inventories to their present location and condition.
Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs to completion
and applicable variable selling expenses. In arriving at net realisable value, due allowance is made for all damaged, obsolete and
slow-moving items.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
163
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets
(i) Classification
The Group has changed its accounting policy for recognition and measurement of financial assets upon the adoption of FRS
139 “Financial instruments: Recognition and Measurement” on 1 January 2010.
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables
and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term. Derivatives are
also categorised as held for trading unless they are designated as hedges.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period.
These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and
‘deposits, cash and bank balances’ in the balance sheets.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless the investment matures or management intends to dispose
of it within 12 months of the end of the reporting period.
(ii) Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to
purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets. not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and
transaction costs are expensed in profit or loss.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
164
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets (continued)
(iii) Subsequent measurement – gains and losses
Available-for-sale financial assets and financial assets through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost using the effective interest method.
Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except for
impairment losses (see accounting policy Note 2(j)(iv)) and foreign exchange gains and losses on monetary assets. The
exchange differences on monetary assets are recognised in the income statement, whereas exchange differences on non-
monetary assets are recognised in other comprehensive income as part of fair value change.
Interest and dividend income on available-for-sale financial assets are recognised separately in profit or loss. Interest on
available-for-sale debt securities calculated using the effective interest method is recognised in profit or loss. Dividend income
on available-for-sale equity instruments are recognised in the income statement when the Group’s right to receive payments
is established.
(iv) Subsequent measurement – Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition
of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
• Significant financial difficulty of the issuer or obligor;
• A breach of contract, such as a default or delinquency in interest or principal payments;
• The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession
that the lender would not otherwise consider;
• It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
• Disappearance of an active market for that financial asset because of financial difficulties; or
• Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of
financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in the income
statement. If ‘loans and receivables’ have a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on
the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the
previously recognised impairment loss is recognised in the income statement.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
165
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial assets (continued)
(iv) Subsequent measurement – Impairment of financial assets (continued)
When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the
necessary procedures have been completed and the amount of the loss has been determined.
Assets classified as available-for-sale
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a group of
financial assets is impaired.
In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised cost’
above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an indicator that
the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss that had been
recognised directly in equity is removed from equity and recognised in the income statement. The amount of cumulative loss
that is reclassified to the income statement is the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in the income statement. Impairment losses recognised in the
income statement on equity instruments classified as available-for-sale are not reversed through the income statement.
The Group has applied the policy according to the transitional provisions of FRS 139 by re-measuring all financial assets, as
appropriate, and recording any adjustments to the previous carrying amounts to opening retained earnings or, if appropriate,
another category of equity, of the current financial year. Comparatives for financial instruments have not been adjusted and
therefore the corresponding balances are not comparable. Refer to Note 40 for the impact of this change in accounting
policy.
(v) De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive
income are reclassified to profit or loss.
(k) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset
and settle the liability simultaneously.
(l) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured
at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:
(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow
hedge).
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
166
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Derivative financial instruments and hedging activities (continued)
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as
well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 30. The full fair value of a hedging
derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current
asset or liability when the remaining maturity of the hedged item is less than 12 months.
(a) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to
the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in the income statement within ‘finance
costs’. The gain or loss relating to the ineffective portion is recognised in the income statement within ‘other gains/(losses) –
net’. Changes in the fair value of the hedge fixed rate borrowings attributable to interest rate risk are recognised in the income
statement within ‘finance costs’.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for
which the effective interest method is used is amortised to the income statement over the period to maturity.
(b) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in
the income statement within ‘other gains/(losses) – net’.
Amounts accumulated in equity are reclassified to the income statement in the periods when the hedged item affects profit
or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of
interest rate swaps hedging variable rate borrowings is recognised in the income statement within ‘revenue’.
However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory
or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included
in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in
the case of inventory or in depreciation in the case of property, plant and equipment.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement within ‘other gains/(losses) –
net’.
The Group has applied the policy according to the transitional provisions of FRS 139 by recognising and measuring derivatives,
as appropriate, and recording any adjustments to the previous carrying amounts to the opening retained earnings or, if
appropriate, another category of equity, of the current financial year. Comparatives for financial instruments have not been
adjusted and therefore the corresponding balances are not comparable. Refer to Note 40 for the impact of this change in
accounting policy.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
167
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current
assets. Otherwise, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less allowance for impairment.
Cash and cash equivalentsFor the purpose of the cash flow statements, cash and cash equivalents comprise cash on hand, bank balances, demand deposits
and other short term, highly liquid investments with original maturities of three months or less, less bank overdrafts. Deposits held
as pledged securities for term loans granted are not included as cash and cash equivalents.
(o) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is
probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be
made. Provisions are not recognised for future operating losses.
(p) Share capital
(i) Classification
Ordinary shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liability
according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified
as an equity instrument are charged directly to equity.
(ii) Share issue costs
Incremental external costs directly attributable to the issuance of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
(iii) Dividends to shareholders of the Company
Dividends on ordinary shares are recognised as a liability in the period in which they are declared. A dividend declared after the
end of the reporting period, but before the financial statements are authorised for issue, is not recognised as a liability at the
end of the reporting period.
(q) Borrowings
Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. The finance costs, which
represent the difference between the net proceeds and the total amount of the payments of these borrowings, are allocated to
periods over the term of the borrowings at a constant rate on the carrying amount and are charged to the income statement.
Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported
within finance cost in the income statement.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the balance sheet date.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
168
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Income taxes
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all
taxes based upon the taxable profits, including withholding taxes payable by foreign subsidiaries, jointly controlled entities or
associates.
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to
assets and liabilities for tax purposes and their carrying amounts in the financial statements.
Deferred tax assets are recognised for the carry forward of unused tax losses and tax credits (including investment tax allowances)
to the extent that it is probable that taxable profits will be available against which the unutilised tax losses and unused tax credits
can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, jointly controlled entities and associates
except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
The Group’s share of income taxes of jointly controlled entities and associates are included in the Group’s share of results of jointly
controlled entities and associates.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
(s) Employee benefits
(i) Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the financial year in
which the associated services are rendered by the employees of the Group.
(ii) Defined contribution plan
The Group’s contributions to the Employees’ Provident Fund are charged to the income statement in the financial year to which
they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) Share based payments
FRS 2 – Share-based Payment requires recognition of share-based payment transactions including the value of share options
in the financial statements. There is no impact on the financial statements of the Group following the prospective application
of FRS 2 in 2006 as all the share options of the Company were fully vested prior to the effective date of the standard.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
169
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) Revenue recognition
Scheduled passenger flight and chartered flight income are recognised upon the rendering of transportation services and where
applicable, are stated net of discounts. The value of seats sold for which services have not been rendered is included in current
liabilities as sales in advance. Revenue from aircraft rentals is recorded on a straight-line basis over the term of the lease.
Other revenue which includes fuel surcharge, insurance surcharge, administrative fees, excess baggage and baggage handling
fees, are recognised upon the completion of services rendered and where applicable, are stated net of discounts. Freight and
other related revenue are recognised upon the completion of services rendered and where applicable, are stated net of discounts.
Income from the provision of tour operations (both inbound and outbound) and travel agency services is recognised upon services
being rendered and where applicable, are stated net of discounts.
Rental income is recognised on an accrual basis.
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of
the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables are
recognised using the original effective interest rate.
(u) Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to
shareholders’ equity. When a foreign operation is disposed of or sold, such exchange differences that were recorded in equity are
recognised in the income statement as part of the gain or loss on disposal.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
170
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Contingent liabilities
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is
a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control
of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be
recognised because it cannot be measured reliably.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interests.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination
where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be
reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date
of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 137 ‘Provisions,
Contingent Liabilities and Contingent Assets’ and the amount initially recognised less, when appropriate, cumulative amortisation
recognised in accordance with FRS 118 ‘Revenue’.
(w) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-marker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the management committee that makes strategic decisions.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal
the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have a
material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next year are explained below.
(i) Estimated useful lives and residual values of aircraft frames and engines
The Group reviews annually the estimated useful lives and residual values of aircraft frames and engines based on factors such as
business plans and strategies, expected level of usage, future technological developments and market prices.
Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors
mentioned above. A reduction in the estimated useful lives and residual values of aircraft frames and engines as disclosed in Note
2(d), would increase the recorded depreciation charge and decrease the carrying amount of property, plant and equipment.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
171
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)
(ii) Deferred tax assets
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
temporary differences can be utilised. Estimating the future taxable profits involves significant assumptions, especially in respect
of fares, load factor, fuel price, maintenance costs and currency movements. These assumptions have been built based on past
performance and adjusted for non-recurring circumstances and a reasonable growth rate. However, even where the actual taxable
profits in the future are 5 percent lower than the anticipated taxable profits, the deferred tax assets can still be fully utilised.
(iii) Recoverability of intercompany balances
The Group has investments in Thai AirAsia Co. Ltd and PT Indonesia AirAsia, both of which provide air transportation services, as
disclosed in Notes 14 and 15 to the financial statements respectively. As at the balance sheet date, the amounts owing by these
related parties amounted to RM99.8 million (2009: RM366.4 million) and RM268.1 million (2009: RM445.8 million) respectively.
No allowances for impairment have been provided for these balances as the Directors are of the view that these related parties
would have sufficient future funds to repay these debts, based on the projected cash flows of these entities.
(iv) Valuation of available-for-sale equity investments
The Group has an investment in an unquoted corporation, AirAsia X Sdn Bhd, which was previously classified as other investments
and is now categorised within available-for-sale financial assets upon the adoption of FRS 139. The Group follows the guidance
of FRS 139 to determine when the valuation of an available-for-sale equity investment and if it is impaired. This determination
requires a high degree of subjectivity and significant judgment. In making this judgment, the Group is dependent on the key bases
and assumptions which include, among other factors, the prices of fuel, fares, load factor, currency movements; and the financial
health of and short term business outlook for the investee, including factors such as industry and route performance, changes in
technology and operational and financing cash flows.
4 REVENUE
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Passenger seat sales 2,830,920 2,138,011 2,830,920 2,138,011
Aircraft operating lease income 395,943 320,332 395,943 320,332
Surcharges and fees 13,938 261,193 13,938 261,193
Travel and tour operations 83,636 60,852 – –
Other revenue 623,658 352,513 623,658 352,513
3,948,095 3,132,901 3,864,459 3,072,049
Other revenue includes excess baggage, baggage handling fee, freight and cancellation, documentation and booking fees amounting to
RM539.9 million (2009: RM304.0 million) for the Group and Company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
172
5 STAFF COSTS
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Wages, salaries, bonus and allowances 318,316 279,707 316,642 278,379
Defined contribution retirement plan 42,469 26,295 42,299 26,172
360,785 306,002 358,941 304,551
Included in staff costs is Executive Directors’ remuneration which is analysed as follows:
Group and Company
2010 2009
RM’000 RM’000
Executive Directors
– basic salaries, bonus and allowances 14,400 8,640
– defined contribution plan 1,728 1,037
Non-executive Directors
– fees 2,203 983
18,331 10,660
The remuneration payable to the Directors of the Company is analysed as follows:
Executive Non-executive
2010 2009 2010 2009
Range of remuneration
RM100,001 to RM150,000 – – – 3
RM150,001 to RM200,000 – – – 3
RM300,001 to RM350,000 – – 2 –
RM350,001 to RM400,000 – – 3 –
RM450,001 to RM500,000 – – 1 –
RM4,000,001 to RM5,000,000 – 1 – –
RM5,000,001 to RM6,000,000 – 1 – –
RM7,000,001 to RM8,000,000 1 – – –
RM8,000,001 to RM9,000,000 1 – – –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
173
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
5 STAFF COSTS (CONTINUED)
Set out below are details of outstanding options over the ordinary shares of the Company granted under the ESOS to the Directors:
Exercise
Expiry price At At
Grant date date RM/share 1.1.2010 Exercised Lapsed 31.12.2010
’000 ’000 ’000 ’000
1 September 2004 6 June 2014 1.08 1,200 – – 1,200
2010 2009
’000 ’000
Number of share options vested at balance sheet date 1,200 1,200
During the previous financial year, the exercise period of the ESOS which expired on 6 June 2009 was extended for a further 5 years to
6 June 2014.
6 OTHER OPERATING EXPENSES
The following items have been charged/(credited) in arriving at other operating expenses:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Property, plant and equipment
– Write off – 388 – 388
– Impairment 6,996 – 6,996 –
Rental of land and building 10,877 4,181 10,877 4,157
Auditors’ remuneration
– audit fees 586 467 556 438
– audit related fees 255 10 255 10
– non-audit fees 1,494 51 1,494 51
Rental of equipment 2,151 1,475 2,151 1,475
Advertising costs 28,993 33,702 26,008 33,387
Amortisation of long term prepayments 24,741 9,645 24,741 9,645
Amortisation of other investments 12 11 12 11
Net foreign exchange (gain)/loss
– Realised (7,125) (49,020) (7,489) (49,968)
– Unrealised 64,601 36,168 64,596 36,168
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
174
7 OTHER LOSSES – NET
Group and Company
2010 2009
RM’000 RM’000
Interest rate contracts – Held for trading (42,585) –
Forward foreign exchange contracts – Held for trading 25,391 –
Fuel contracts – Held for trading 832 –
Ineffectiveness on cash flow hedges (Note 30) (6,054) –
Total (22,416) –
8 OTHER INCOME
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Gain on disposals of property, plant and equipment 1,311 30,696 1,311 30,696
Others 34,632 71,687 34,056 71,687
35,943 102,383 35,367 102,383
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
175
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
9 FINANCE INCOME/(COSTS)
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Finance income:
Foreign exchange gains on borrowings
– Realised – 2,295 – 2,295
– Unrealised 741,334 75,910 741,334 75,910
Interest income
– deposits with licensed banks 826 1,009 826 1,009
– short term deposits with fund management companies 2,692 627 2,692 627
– interest income on amounts due from
associates and jointly controlled entities 53,925 – 53,925 –
– other interest income 9,256 4,664 9,246 4,621
808,033 84,505 808,023 84,462
Finance costs:
Realised foreign exchange loss on borrowings (29,208) – (29,208) –
Unrealised foreign exchange loss on amounts due from
associates and jointly controlled entities (89,978) – (89,978) –
Fair value losses on derivative financial instruments (272,612) – (272,612) –
Interest expense
– bank borrowings (374,364) (371,141) (374,364) (371,141)
– amortisation of premiums for interest rate caps (7,750) – (7,750) –
– hire-purchase payables (10) (12) (10) (12)
Bank facilities and other charges (2,216) (3,818) (2,212) (3,818)
(776,138) (374,971) (776,134) (374,971)
Net finance income/(costs) 31,895 (290,466) 31,889 (290,509)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
176
10 TAXATION
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Current taxation
– Malaysian tax 13,240 12,301 13,226 12,301
– Foreign tax 2,967 1,805 2,967 1,805
Overprovision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Deferred taxation (Note 19) 32,014 104,835 32,014 104,835
37,445 116,021 37,431 116,021
Current taxation
– Current financial year 16,207 14,106 16,193 14,106
– Overprovision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Deferred taxation
– Origination and reversal of temporary differences 197,852 121,581 197,852 121,581
– Tax incentives (165,838) (16,746) (165,838) (16,746)
37,445 116,021 37,431 116,021
The current taxation charge is in respect of interest income which is assessed separately.
The explanation of the relationship between taxation and profit before taxation is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Profit before taxation 1,098,856 622,288 1,092,506 618,020
Tax calculated at Malaysian tax rate of 25% (2009: 25%) 274,714 155,572 273,127 154,505
Tax effects of:
– expenses not deductible for tax purposes 18,078 2,559 19,651 3,626
– income not subject to tax (79,245) (23,268) (79,245) (23,268)
– temporary differences not recognised within the pioneer period 512 824 512 824
– tax incentives (165,838) (16,746) (165,838) (16,746)
– over provision of income tax in prior years (10,776) (2,920) (10,776) (2,920)
Taxation 37,445 116,021 37,431 116,021
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
177
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
11 EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit for the financial year by the weighted average number of ordinary
shares in issue during the financial year.
Group
2010 2009
Profit for the financial year (RM’000) 1,061,411 506,267
Weighted average number of ordinary shares in issue (‘000) 2,761,637 2,456,443
Earnings per share (sen) 38.4 20.6
(b) Diluted earnings per share
For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares.
The Group has dilutive potential ordinary shares arising from the Company’s share options granted to employees.
In assessing the dilution in earnings per share arising from the issue of share options, a computation is performed to determine
the number of shares that could have been acquired at fair value (determined as the average annual market share price of the
Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. This
computation serves to determine the “bonus” element to the ordinary shares outstanding for the purpose of computing the
dilution. No adjustment is made to net profit for the financial year in the calculation of the diluted earnings per share from the issue
of the share options.
The number of shares calculated as above is compared with the number of shares that would have been issued assuming the
exercise of the share options.
Group
2010 2009
Profit for the financial year (RM’000) 1,061,411 506,267
Weighted average number of ordinary shares in issue (‘000) 2,761,637 2,456,443
Adjustment for ESOS (‘000) 8,644 –
Weighted average number of ordinary shares for diluted earnings per share 2,770,281 2,456,443
Diluted earnings per share (sen) 38.3 20.6
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
178
12 PROPERTY, PLANT AND EQUIPMENT
At Reclassi- Depreciation At 31
1 January 2010 Additions fications Impairment charge December 2010
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Net book value
Aircraft engines, airframe
and service potential 7,676,107 1,847,573 – (6,996) (471,060) 9,045,624
Aircraft spares 118,694 27,118 – – (20,031) 125,781
Aircraft fixtures and fittings 28,342 5,902 – – (11,481) 22,763
Buildings 37,990 842 – – (1,445) 37,387
Motor vehicles 4,961 4,282 – – (2,461) 6,782
Office equipment,
furniture and fittings 11,208 11,990 – – (4,581) 18,617
Office renovation 2,870 1,458 – – (1,510) 2,818
Simulator equipment 47,670 58 – – (2,044) 45,684
Operating plant and
ground equipment 10,989 2,419 566 – (4,566) 9,408
Kitchen equipment 194 – – – – 194
In flight equipment 423 826 – – (192) 1,057
Training equipment 2,174 365 – – (613) 1,926
Assets not yet in operation 566 – (566) – – –
7,942,188 1,902,833 – (6,996) (519,984) 9,318,041
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Group
At 31 December 2010
Aircraft engines, airframe and service potential 10,469,160 (1,423,536) 9,045,624
Aircraft spares 195,155 (69,374) 125,781
Aircraft fixtures and fittings 71,504 (48,741) 22,763
Buildings 41,204 (3,817) 37,387
Motor vehicles 18,619 (11,837) 6,782
Office equipment, furniture and fittings 49,116 (30,499) 18,617
Office renovation 10,655 (7,837) 2,818
Simulator equipment 55,988 (10,304) 45,684
Operating plant and ground equipment 28,121 (18,713) 9,408
Kitchen equipment 202 (8) 194
In flight equipment 1,385 (328) 1,057
Training equipment 3,098 (1,172) 1,926
10,944,207 (1,626,166) 9,318,041
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
179
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At Reclassi- Depreciation At 31
1 January 2009 Additions fications Write off Disposals charge December 2009
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Net book value
Aircraft engines, airframe
and service potential 6,337,262 1,894,583 (102) – (151,810) (403,826) 7,676,107
Aircraft spares 100,820 33,491 – – – (15,617) 118,694
Aircraft fixtures and fittings 36,784 3,290 – – – (11,732) 28,342
Buildings 13,982 – 24,528 – – (520) 37,990
Motor vehicles 5,194 2,149 – – – (2,382) 4,961
Office equipment, furniture
and fittings 10,208 5,662 83 – – (4,745) 11,208
Office renovation 2,814 1,609 – – – (1,553) 2,870
Simulator equipment 49,740 168 – – – (2,238) 47,670
Operating plant and ground
equipment 11,772 3,998 102 (388) (32) (4,463) 10,989
Kitchen equipment 194 – – – – – 194
In flight equipment 308 216 – – – (101) 423
Training equipment 620 2,021 – – – (467) 2,174
Assets not yet in operation 24,601 576 (24,611) – – – 566
6,594,299 1,947,763 – (388) (151,842) (447,644) 7,942,188
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Group
At 31 December 2009
Aircraft engines, airframe
and service potential 8,628,583 (952,476) 7,676,107
Aircraft spares 168,037 (49,343) 118,694
Aircraft fixtures and fittings 65,602 (37,260) 28,342
Buildings 40,362 (2,372) 37,990
Motor vehicles 14,337 (9,376) 4,961
Office equipment, furniture and fittings 37,126 (25,918) 11,208
Office renovation 9,197 (6,327) 2,870
Simulator equipment 55,930 (8,260) 47,670
Operating plant and ground equipment 25,136 (14,147) 10,989
Kitchen equipment 202 (8) 194
In flight equipment 559 (136) 423
Training equipment 2,733 (559) 2,174
Assets not yet in operation 566 – 566
9,048,370 (1,106,182) 7,942,188
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
180
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At At
1 January Reclassi- Depreciation 31 December
2010 Additions fications Impairment charge 2010
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Net book value
Aircraft engines, airframe and
service potential 7,676,107 1,847,573 – (6,996) (471,060) 9,045,624
Aircraft spares 118,694 27,118 – – (20,031) 125,781
Aircraft fixtures and fittings 28,342 5,902 – – (11,481) 22,763
Buildings 37,990 842 – – (1,445) 37,387
Motor vehicles 4,356 4,282 – – (2,461) 6,177
Office equipment, furniture and fittings 11,112 11,431 – – (4,556) 17,987
Office renovation 2,870 1,437 – – (1,509) 2,798
Simulator equipment 47,670 58 – – (2,044) 45,684
Operating plant and ground equipment 10,989 2,419 566 – (4,566) 9,408
In flight equipment 423 826 – – (192) 1,057
Training equipment 2,174 365 – – (613) 1,926
Assets not yet in operation 566 – (566) – – –
7,941,293 1,902,253 – (6,996) (519,958) 9,316,592
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Company
At 31 December 2010
Aircraft engines, airframe
and service potential 10,469,160 (1,423,536) 9,045,624
Aircraft spares 195,155 (69,374) 125,781
Aircraft fixtures and fittings 71,504 (48,741) 22,763
Buildings 41,204 (3,817) 37,387
Motor vehicles 18,021 (11,844) 6,177
Office equipment, furniture and fittings 48,462 (30,475) 17,987
Office renovation 10,634 (7,836) 2,798
Simulator equipment 55,988 (10,304) 45,684
Operating plant and ground equipment 28,121 (18,713) 9,408
In flight equipment 1,385 (328) 1,057
Training equipment 3,098 (1,172) 1,926
10,942,732 (1,626,140) 9,316,592
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
181
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
At 1 Reclassi- Depreciation At 31
January 2009 Additions fications Write off Disposals charge December 2009
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Net book value
Aircraft engines, airframe
and service potential 6,337,262 1,894,583 (102) – (151,810) (403,826) 7,676,107
Aircraft spares 100,820 33,491 – – – (15,617) 118,694
Aircraft fixtures and fittings 36,784 3,290 – – – (11,732) 28,342
Buildings 13,982 – 24,528 – – (520) 37,990
Motor vehicles 4,589 2,149 – – – (2,382) 4,356
Office equipment, furniture
and fittings 10,122 5,645 83 – – (4,738) 11,112
Office renovation 2,814 1,609 – – – (1,553) 2,870
Simulator equipment 49,740 168 – – – (2,238) 47,670
Operating plant and ground
equipment 11,772 3,998 102 (388) (32) (4,463) 10,989
In flight equipment 308 216 – – – (101) 423
Training equipment 620 2,021 – – – (467) 2,174
Assets not yet in operation 24,601 576 (24,611) – – – 566
6,593,414 1,947,746 – (388) (151,842) (447,637) 7,941,293
Accumulated Net book
Cost depreciation value
RM’000 RM’000 RM’000
Company
At 31 December 2009
Aircraft engines, airframe
and service potential 8,628,583 (952,476) 7,676,107
Aircraft spares 168,037 (49,343) 118,694
Aircraft fixtures and fittings 65,602 (37,260) 28,342
Buildings 40,362 (2,372) 37,990
Motor vehicles 13,732 (9,376) 4,356
Office equipment, furniture and fittings 37,031 (25,919) 11,112
Office renovation 9,197 (6,327) 2,870
Simulator equipment 55,930 (8,260) 47,670
Operating plant and ground equipment 25,136 (14,147) 10,989
In flight equipment 559 (136) 423
Training equipment 2,733 (559) 2,174
Assets not yet in operation 566 – 566
9,047,468 (1,106,175) 7,941,293
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
182
12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Included in property, plant and equipment of the Group and the Company are assets with the following net book values:
Group and Company
2010 2009
RM’000 RM’000
Net book value of owned aircraft sub-leased out 3,445,485 2,458,972
Aircraft pledged as security for borrowings (Note 29) 9,030,028 7,643,739
Simulator pledged as security for borrowings (Note 29) 41,371 43,409
Motor vehicles on hire-purchase 16 76
The beneficial ownership and operational control of aircraft pledged as security for borrowings rests with the Company when the aircraft
is delivered to the Company.
Where the legal title to the aircraft is held by financiers during delivery, the legal title will be transferred to the Company only upon
settlement of the respective facilities.
13 INVESTMENT IN SUBSIDIARIES
Company
2010 2009
RM’000 RM’000
Unquoted investments, at cost 25,384 22,194
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
183
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
13 INVESTMENT IN SUBSIDIARIES (CONTINUED)
The details of the subsidiaries are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
Directly held by the Company
Crunchtime Culinary Services
Sdn Bhd (“Crunchtime”)
Malaysia 100.0 100.0 Provision of in flight meals, currently dormant
AA International Ltd (“AAIL”) * Malaysia 100.0 100.0 Investment holding
AirAsia Go Holiday Sdn Bhd Malaysia 100.0 100.0 Tour operating business
AirAsia (Mauritius) Limited
(“AirAsia Mauritius”) *
Mauritius 100.0 100.0 Providing aircraft leasing facilities to Thai AirAsia Co.
Ltd
Airspace Communications
Sdn Bhd (“Airspace”)
Malaysia 100.0 100.0 Media owner with publishing division,
AirAsia (B) Sdn Bhd * Negara Brunei
Darussalam
100.0 100.0 Providing air transportation services, currently
dormant
AirAsia Corporate Services
Limited *
Malaysia 100.0 100.0 Facilitate business transactions for AirAsia Group
with non-resident goods and service providers
Aras Sejagat Sdn Bhd Malaysia 100.0 100.0 Special purpose vehicle for financing arrangements
required by AirAsia
Koolred Sdn Bhd Malaysia 100.0 – Dormant
Asia Air Limited * United Kingdom 100.0 100.0 To provide and promote AirAsia’s in flight food to the
European market
Held by AAIL
AirAsia (Hong Kong) Limited
(“AirAsia HK”) *
Hong Kong 100.0 100.0 Dormant
AA Capital Ltd * Malaysia 100.0 100.0 Dormant
* Not audited by PricewaterhouseCoopers, Malaysia
14 INVESTMENT IN A JOINTLY CONTROLLED ENTITY
Group
2010 2009
RM’000 RM’000
Represented by:
Unquoted investment, at cost 12,054 12,054
Group’s share of post acquisition reserves (12,054) (12,054)
– –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
184
14 INVESTMENT IN A JOINTLY CONTROLLED ENTITY (CONTINUED)
The details of the jointly controlled entity are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
Held by AAIL
Thai AirAsia Co. Ltd
(“Thai AirAsia”)
Thailand 48.9 48.9 Aerial transport of persons, things and posts
The Group’s share of the results of the jointly controlled entity, which has not been equity accounted for, is as follows:
2010 2009
RM’000 RM’000
Revenue 611,530 458,065
Expenses (471,087) (412,023)
Profit/(loss) before taxation 140,443 (46,042)
Taxation – –
Net profit/(loss) for the financial year 140,443 (46,042)
The Group’s share of assets and liabilities of the jointly controlled entity is as follows:
2010 2009
RM’000 RM’000
Non-current assets 14,597 14,242
Current assets 82,601 89,855
Current liabilities (217,168) (364,510)
Share of net liabilities of the jointly controlled entity (119,970) (260,413)
The Group discontinued recognition of its share of further losses made by Thai AirAsia as the Group’s interest in the jointly controlled
entity has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the jointly
controlled entity. As at 31 December 2010, the unrecognised amount of the Group’s share of losses of Thai AirAsia which has not been
equity accounted for amounted to RM127.8 million (2009: RM268.2 million).
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
185
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
15 INVESTMENT IN ASSOCIATES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Unquoted investment, at cost 4,141 4,141 29 29
Group’s share of post acquisition losses (4,112) (4,112) – –
29 29 29 29
The details of the associates are as follows:
Name
Country of
incorporation
Group’s effective equity
interest Principal activities
2010
%
2009
%
AirAsia Philippines Inc Philippines 39.9 39.9 Providing air transportation
Services, currently dormant
AirAsia Pte Ltd (“AAPL”) Singapore 48.9 48.9 Dormant
Asian Contact Centres Sdn. Bhd. Malaysia 50.0 50.0 Providing end-to-end solutions for customers contact
management and contact centre
Held by AAIL
PT Indonesia AirAsia (“IAA”) Indonesia 48.9 48.9 Commercial air transport service
AirAsia Go Holiday Co. Ltd Thailand 49.0 49.0 Tour operating business, currently dormant
The Group’s share of the results of associates, which has not been equity accounted for, is as follows:
2010 2009
RM’000 RM’000
Revenue 463,176 338,931
Expenses (383,380) (459,533)
Profit/(loss) before taxation 79,796 (120,602)
Taxation – –
Net profit/(loss) for the financial year 79,796 (120,602)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
186
15 INVESTMENT IN ASSOCIATES (CONTINUED)
The Group’s share of assets and liabilities of the associates is as follows:
2010 2009
RM’000 RM’000
Non-current assets 17,705 18,222
Current assets 13,491 21,376
Current liabilities (229,116) (317,314)
Non-current liabilities (23,354) (23,354)
Share of net liabilities of associates (221,274) (301,070)
The Group discontinued recognition of its share of further losses made by IAA as the Group’s interest in this associate has been reduced
to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the associate. As at 31 December
2010, the unrecognised amounts of the Group’s share of losses of IAA which have not been equity accounted for amounted to RM196.6
million (2009: RM276.4 million).
16 AVAILABLE-FOR-SALE FINANCIAL ASSETS
Group and Company
2010 2009
RM’000 RM’000
Non-current
At 1 January – as previously stated – –
Effects of adoption of FRS 139 (Note 40) 132,663 –
At 1 January (restated) 132,663 –
Additions 16,000 –
Fair value gain – recognised in other comprehensive income 4,279 –
At 31 December 152,942 –
Investment in an unquoted corporation, AirAsia X Sdn Bhd, which was previously classified as other investment (Note 17) is categorised
as available-for-sale financial assets upon the adoption of FRS 139.
During the financial year, the Group acquired a further of 16,000,000 redeemable convertible preference shares Series 1 (“RCPS”) of
RM1.00 each at par in AirAsia X Sdn Bhd.
The fair value of the investment is based on the price earnings ratio (PER) of listed comparable companies. The maximum exposure to
credit risk at the reporting date is the carrying value of the security. This financial asset is neither past due nor impaired.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
187
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
17 OTHER INVESTMENTS
Group and Company
2010 2009
RM’000 RM’000
Non-current:
Recreational golf club membership 25 37
Investment in AirAsia X Sdn Bhd – 26,667
25 26,704
With the adoption of FRS 139 effective from 1 January 2010, other investments are now classified as available-for-sale financial assets
(see Note 16).
Group and Company
2010 2009
RM’000 RM’000
At 1 January – as previously stated 26,704 26,715
Effects of adoption of FRS 139 (26,667) –
At 1 January (restated) 37 26,715
Amortisation of other investments (12) (11)
At 31 December 25 26,704
18 GOODWILL
Group
RM’000
Cost/net book value
At 31 December 2009/31 December 2010 8,738
The Group undertakes an annual test for impairment of goodwill. The carrying amount of goodwill is allocated to the Group’s cash
generating unit, which primarily comprised the investment in a subsidiary, AAIL. No impairment loss was required for the carrying amount
of goodwill assessed as at 31 December 2010 as the recoverable amount is in excess of the carrying amount.
Key assumptions used in the value-in-use calculations
The recoverable amount of the cash-generating unit including goodwill is determined based on the value-in-use calculation. This value-in-
use calculation applies a discounted cash flow model using cash flow projections covering a five-year period for the subsidiary’s business
operations. The projections reflect the subsidiary’s expectation of revenue growth, operating costs and margins of its investment based
on past experience and current assessment of market share, expectation of market growth and industry growth.
For purposes of the value-in-use calculation, a discount rate of 10% per annum has been applied. The discount rate reflects an
independent market rate applicable to the operations of the cash generating unit.
Impact of possible change in key assumptions
Sensitivity analysis shows that no impairment loss is required for the carrying amount of goodwill, including where realistic variations
are applied to key assumptions.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
188
19 DEFERRED TAXATION
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are
shown in the balance sheets:
Group and Company
2010 2009
RM’000 RM’000
Deferred tax assets 719,260 751,274
The movements in the deferred tax assets and liabilities of the Group and the Company during the financial year are as follows:
Group and Company
2010 2009
RM’000 RM’000
At start of financial year 751,274 856,109
(Charged)/credited to income statement (Note 10)
– Property, plant and equipment (197,852) (58,874)
– Tax incentives 165,838 16,746
– Tax losses – (24,779)
– Provisions – (37,928)
(32,014) (104,835)
At end of financial year 719,260 751,274
Deferred tax assets (before offsetting)
Tax incentives 991,735 825,897
Tax losses 9,171 9,171
1,000,906 835,068
Offsetting (281,646) (83,794)
Deferred tax assets (after offsetting) 719,260 751,274
Deferred tax liabilities (before offsetting)
Property, plant and equipment (281,646) (83,794)
Offsetting 281,646 83,794
Deferred tax liabilities (after offsetting) – –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
189
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
19 DEFERRED TAXATION (CONTINUED)
As disclosed in Note 3 to the financial statements in respect of critical accounting estimates and judgments, the deferred tax assets are
recognised on the basis of the Company’s previous history of recording profits, and to the extent that it is probable that future taxable
profits will be available against which temporary differences can be utilised. Estimating the future taxable profits involves significant
assumptions, especially in respect of fares, load factor, fuel price, maintenance costs and currency movements. These assumptions
have been built based on past performance and adjusted for non-recurring circumstances and a reasonable growth rate.
On 27 May 2010, the Ministry of Finance, granted approval to the Company under Section 127 of Income Tax Act, 1967 for income tax
exemption in the form of an Investment Allowance (“IA”) of 60% on qualifying expenditure incurred within a period of 5 years commencing
1 July 2009 to 30 June 2014, to be set off against 70% of statutory income for each year of assessment. In the previous financial year,
management had not recognised any IA beyond 30 June 2009 as the likelihood of successfully renewing this incentive was not known at
that juncture. IA in respect of four aircraft that were acquired between July and December 2009 has now been recognised in the deferred
tax assets computation as at 31 December 2010.
20 RECEIVABLES AND PREPAYMENTS
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Non-current:
Long term prepayments 23,593 23,593 23,593 23,593
Current:
Trade receivables 105,325 70,520 93,911 70,530
Less: Allowance for impairment (1,994) (1,994) (1,994) (1,994)
103,331 68,526 91,917 68,536
Other receivables 124,045 114,161 110,815 113,870
Less: Allowance for impairment (1,072) (1,072) (1,072) (1,072)
122,973 113,089 109,743 112,798
Prepayments 326,049 250,997 325,516 250,408
Deposits 288,769 288,470 288,745 287,866
841,122 721,082 815,921 719,608
Credit terms of trade receivables range from 0 to 60 days.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
190
20 RECEIVABLES AND PREPAYMENTS (CONTINUED)
As of 31 December 2010, the Group’s trade receivables of RM103,331,000 consist of RM78,543,000 that is neither past due nor
impaired and RM24,788,000 that is past due but not impaired. These relate to a number of independent customers for whom there is
no recent history of default. The ageing analysis of these trade receivables that is past due but not impaired is as follows:
Group
2010
RM’000
Up to 3 months 9,430
Over 3 months 15,358
24,788
As of 31 December 2010, trade receivables of RM1,994,000 were impaired and provided for. The amount of the allowance was
RM1,994,000 as of 31 December 2010.
The currency exposure profile of receivables and deposits (excluding prepayments) is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
RM 122,123 118,805 97,466 117,920
USD 353,417 343,374 353,417 343,374
Others 39,533 7,906 39,522 7,906
515,073 470,085 490,405 469,200
Included in long term prepayments is prepaid lease rental, which is charged to the income statements over the term of the lease of the
low cost carrier terminal building.
Included in deposits are cash collateral for derivatives and deposits to lessors for maintenance of aircraft amounting to RM215.8 million
(2009: RM192.8 million) for the Group and Company.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group
does not hold any collateral as security.
The carrying amounts of the Group’s and the Company’s trade and other receivables approximate their fair values.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
191
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
21 AMOUNTS DUE FROM/(TO) A JOINTLY CONTROLLED ENTITY
The amount due from Thai AirAsia Co. Ltd (“TAA”), the jointly controlled entity, is denominated in US Dollar, unsecured, has no fixed
terms of repayment and is interest bearing at a rate equivalent to the Company’s borrowing rate. The amount due from TAA was charged
interest at 6% per annum with effect from 1 January 2010.
The analysis of the movements in the amount due from a jointly controlled entity for the financial year ended 31 December 2010 is as
follows:
Group
2010 2009
RM’000 RM’000
Current
At 1 January as previously stated 366,388 309,683
Effects of adoption of FRS 139 (15,462) –
At 1 January (restated) 350,926 309,683
Recharges and other expenses 468,082 385,238
Receipts and settlements (684,781) (312,459)
Foreign exchange loss on translation (39,424) (16,074)
Unwinding of discount on receivables per FRS 139 4,999 –
At 31 December 99,802 366,388
The amount due to the jointly controlled entity at the Company level of RM322.6 million (2009: Nil) is interest free and offsets against
amounts receivable from subsidiaries upon consolidation.
22 AMOUNTS DUE FROM/(TO) ASSOCIATES
The amounts due from associates are unsecured with no fixed terms of repayment and are interest bearing at a rate equivalent to the
Company’s borrowing rate. An amount of RM117,964,000 (2009: RM253,037,000) is repayable after 12 months. An amount due from
an associate company was charged interest at 6% per annum with effect from 1 January 2010.
The analysis of the movements in the amounts due from associates for the financial year ended 31 December 2010 is as follows:
Group
2010 2009
RM’000 RM’000
Current
At 1 January 456,967 387,647
Effects of adoption of FRS 139 (16,841) –
At 1 January (restated) 440,126 387,647
Recharges and other expenses 520,800 490,403
Receipts and settlements (618,226) (404,639)
Foreign exchange loss on translation (66,998) (16,444)
Unwinding of discount on receivables per FRS 139 4,648 –
At 31 December 280,350 456,967
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
192
22 AMOUNTS DUE FROM/(TO) ASSOCIATES (CONTINUED)
The currency exposure profile of the amounts due from/(to) associates is as follows:
Group and Company
2010 2009
RM’000 RM’000
Amounts due from associates
– USD 268,058 445,776
– Philippines Peso (“PHP”) 12,292 11,191
280,350 456,967
Amount due to an associate
– Singapore Dollar (“SGD”) (5,223) (3,382)
23 INVENTORIES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Spares and consumables 14,304 18,050 14,304 18,050
In flight merchandise and others 3,249 2,814 2,701 2,266
17,553 20,864 17,005 20,316
24 AMOUNTS DUE FROM SUBSIDIARIES AND A RELATED PARTY
The amounts due from subsidiaries are unsecured, interest bearing and have no fixed terms of repayment.
The amount due from a related party in the previous financial year was denominated in Ringgit Malaysia, unsecured, interest free and
had no fixed terms of repayment.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
193
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
25 CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statements, cash and cash equivalents include the following:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Cash and bank balances 681,859 254,207 676,303 253,240
Deposits with licensed banks 719,439 391,478 719,439 391,478
Short-term deposits with fund management companies 103,319 100,627 103,319 100,627
Deposits, cash and bank balances 1,504,617 746,312 1,499,061 745,345
Deposits pledged as securities (28,789) (27,847) (28,789) (27,847)
1,475,828 718,465 1,470,272 717,498
The currency exposure profile of deposits, cash and bank balances is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Malaysian Ringgit 784,672 526,688 783,031 525,721
United States Dollar 211,677 121,107 207,851 121,107
Singapore Dollar 172,680 37,246 172,640 37,246
Australian Dollar 118,327 – 118,327 –
Chinese Yuan 63,898 21,143 63,898 21,143
Hong Kong Dollar 63,428 1,843 63,428 1,843
Indian Rupee 41,802 5,729 41,802 5,729
Thai Baht 17,403 20,591 17,361 20,591
Indonesian Rupiah 10,691 1,785 10,691 1,785
Brunei Dollar 9,288 8,047 9,288 8,047
Euro 397 778 392 778
Others 10,354 1,355 10,352 1,355
1,504,617 746,312 1,499,061 745,345
The deposits with licensed banks are pledged as security for banking facilities granted to the Company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
194
25 CASH AND CASH EQUIVALENTS (CONTINUED)
The weighted average effective interest rates of deposits at the balance sheet dates are as follows:
Group Company
2010 2009 2010 2009
% % % %
Deposits with licensed banks 2.62 2.95 2.62 2.95
Short-term deposits with fund management companies 2.64 2.54 2.64 2.54
26 TRADE AND OTHER PAYABLES
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
Trade payables 53,178 90,433 31,710 81,545
Accrual for fuel 121,725 114,660 121,725 114,660
Aircraft maintenance accruals 254,036 261,448 254,036 261,448
Other payables and accruals 484,004 406,449 476,873 404,194
912,943 872,990 884,344 861,847
The currency exposure profile of trade and other payables is as follows:
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
RM 343,518 817,010 314,919 805,867
USD 553,608 44,415 553,608 44,415
Others 15,817 11,565 15,817 11,565
912,943 872,990 884,344 861,847
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
195
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
27 AMOUNTS DUE TO SUBSIDIARIES AND A RELATED PARTY
The amounts due to subsidiaries and a related party are denominated in Ringgit Malaysia, unsecured, interest free and have no fixed
terms of repayment.
28 HIRE-PURCHASE PAYABLES
These amounts represent future instalments under hire-purchase agreements, repayable as follows:
Group and Company
2010 2009
RM’000 RM’000
Minimum payments:
– Not later than 1 year 19 66
– Later than 1 year and not later than 5 years – 19
19 85
Less: Future finance charges (4) (13)
Present value of liabilities 15 72
Present value of liabilities:
– Not later than 1 year 15 56
– Later than 1 year and not later than 5 years – 16
15 72
Liabilities under hire-purchase agreements are effectively secured as the rights to the assets revert to the financiers in the event of
default.
As at 31 December 2010, the effective interest rate applicable to the hire-purchase liabilities was 3.75% (2009: 3.46%) per annum for
the Group and Company. The entire balance is denominated in Ringgit Malaysia.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
196
29 BORROWINGS
Group and Company
Weighted
average
rate of finance 2010 2009
2010 2009 RM’000 RM’000
% %
Current:
Term loans 4.09 4.15 493,211 429,575
Revolving credit facilities – 4.10 – 48,000
Finance lease liabilities 5.50 5.48 51,689 53,877
Commodity Murabaha Finance 4.46 3.99 9,067 8,760
553,967 540,212
Non-current:
Term loans 4.09 4.15 5,906,715 5,507,796
Finance lease liabilities 5.50 5.48 876,929 1,031,313
Commodity Murabaha Finance 4.46 3.99 99,240 108,587
Sukuk 4.85 4.85 420,000 420,000
7,302,884 7,067,696
Total borrowings 7,856,851 7,607,908
The Group’s long term borrowings are repayable as follows:
Group and Company
2010 2009
RM’000 RM’000
Not later than 1 year 553,967 540,212
Later than 1 year and not later than 5 years 2,863,736 2,557,423
Later than 5 years 4,439,148 4,510,273
7,856,851 7,607,908
The currency exposure profile of borrowings is as follows:
RM 528,307 585,347
USD 7,204,819 6,972,039
EURO 123,725 50,522
7,856,851 7,607,908
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
197
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
29 BORROWINGS (CONTINUED)
The carrying amounts and fair values of the non-current borrowings are as follows:
Group and Company
2010 2009
Carrying Fair Carrying Fair
amount value amount value
RM’000 RM’000 RM’000 RM’000
Term loans 5,906,715 4,743,235 5,507,796 4,230,803
Finance lease liabilities 876,929 617,939 1,031,313 769,815
Commodity Murabaha Finance 99,240 80,085 108,587 86,889
Sukuk 420,000 382,043 420,000 371,768
7,302,884 5,823,302 7,067,696 5,459,275
The fair values of the current borrowings equal their carrying amounts, as the impact of discounting is not significant. The fair values are
based on cash flows discounted using a rate based on the borrowing rate of 3.8%.
The above term loans, finance lease liabilities (Ijarah) and Commodity Murabaha Finance are for the purchase of aircraft, spare engines
and simulators.
The repayment terms of term loans and finance lease liabilities are on a quarterly or semi-annually basis. These are secured by the
following:
(a) Assignment of rights under contract with Airbus over each aircraft
(b) Assignment of insurance of each aircraft
(c) Assignment of airframe and engine warranties of each aircraft
The Commodity Murabaha Finance is secured by a second priority charge over the aircraft.
The purpose of the Sukuk is to fund the Company’s capital expenditure and working capital. The Sukuk is secured by the following:
(i) An unconditional and irrevocable bank guarantee provided by financial institutions; and
(ii) An assignment over the proceeds of the Ijarah Service Reserve Account opened by the Company pursuant to the exercise.
The Group has the following undrawn borrowing facilities:
2010 2009
RM’000 RM’000
Fixed rate:
– expiring within one year 48,000 –
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
198
30 DERIVATIVE FINANCIAL INSTRUMENTS
Group and Company
2010
Assets Liabilities
RM’000 RM’000
Non-current
Interest rate swaps – cash flow hedges – (211,457)
Interest rate swaps – held for trading 23,306 (105,545)
Forward foreign exchange contracts – cash flow hedges 2,238 (132,656)
Forward foreign exchange contracts – held for trading – (3,207)
Total 25,544 (452,865)
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedge item is
more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.
The ineffective portion recognised in the income statement arising from cash flow hedges amounted to a loss of RM6.1 million (Note 7).
2010
Notional
amount Fair value
RM’000 RM’000
equivalent
Interest rate caps 635,877 23,306
Interest rate swaps 2,684,830 (317,000)
Cross currency interest rate swaps 198,491 (11,357)
Forward foreign exchange contracts 3,522,199 (122,270)
The fair values of interest rate caps and interest rate swaps are calculated as the present value of the estimated future cash flows
discounted at prevailing rates. The fair values of forward foreign exchange and fuel option contracts are determined using forward
exchange rates or prices based on the relevant forward price curve on the balance sheet date. In assessing the fair values of the
derivatives and financial instruments, the Group makes assumptions that are based on market conditions existing at each balance
sheet date. These instruments are not recognised in the financial statements on inception. However, any gain or loss arising from each
underlying transaction or settlement of the relevant contracts governing those underlying transactions or settlements are measured and
recognised in the financial statements based on the current market rates at that date.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
199
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
30 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
(i) Forward foreign exchange contracts
The notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2010 were RM3.721
million.
As at 31 December 2010, the Group has hedged approximately 41% of its USD liabilities pertaining to its aircraft, engine and
simulator loans into Malaysian Ringgit (“RM”) by using long dated foreign exchange forward contracts. The calculation includes
loans for aircraft deployed to Thai AirAsia and Indonesia AirAsia where the Company receives lease payments in USD. However, if
the calculation is based on loans pertaining to aircraft being deployed to Malaysia, approximately 60% of the loans are hedged from
USD into RM. The latest weighted average foreign forward exchange rate is at 3.2528 USD:RM. Gains and losses recognised in the
hedging reserve in equity on forward foreign exchange contracts as of 31 December 2010 are recognised in the income statement
in the period or periods during which the hedged forecast transaction affects the income statement.
(ii) Interest rate hedging
The notional principal amounts of the outstanding interest rate contracts at 31 December 2010 were RM3.321 billion.
The Group has entered into interest rate hedging transactions to hedge against fluctuations in the USD LIBOR on its existing aircraft
financing for aircraft delivered from 2005 to 2010. As at 31 December 2010, the Group has hedged all its existing floating aircraft
loans at strike rates between 3.25% per annum and 5.20% per annum via interest rate swaps, interest rate caps and cross-currency
swaps. Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31 December 2010 will
be continuously released to the income statement within finance cost until the full repayment of the bank borrowings (Note 29).
(iii) Fuel hedging
As at 31 December 2010, the Group has no outstanding fuel hedging transactions.
31 SHARE CAPITAL
Group and Company
2010 2009
RM’000 RM’000
Authorised:
Ordinary shares of RM0.10 each:
At beginning and end of the financial year 500,000 500,000
Issued and fully paid up:
Ordinary shares of RM0.10 each:
At beginning of the financial year 275,774 237,421
Issued during the financial year 1,570 38,353
At end of the financial year 277,344 275,774
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM275,774,458 to RM277,343,608
by way of issuance of 15,691,500 ordinary shares of RM0.10 each pursuant to the exercise of the Employee Share Option Scheme
(“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM15,377,670, has been
credited to the Share Premium account.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the
Company. There were no other changes in the issued and paid-up capital of the Company during the financial year.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
200
31 SHARE CAPITAL (CONTINUED)
During the previous financial year, the Company increased its issued and paid-up ordinary share capital from RM237,420,958 to
RM275,774,458 by way of issuance of 380,000,000 ordinary shares of RM0.10 each pursuant to the sale of shares at RM1.33 per
share by way of book-building and the issuance of 3,535,000 ordinary shares of RM0.10 each pursuant to the exercise of the ESOS
at an exercise price of RM1.08 per share. The premium arising from the book-building and exercise of ESOS of RM467,400,000 and
RM3,464,300 respectively had been credited to the Share Premium account.
The new ordinary shares issued during the previous financial year ranked pari passu in all respects with the existing ordinary shares of
the Company. There were no other changes in the issued and paid-up capital of the Company during previous the financial year.
EMPLOYEE SHARE OPTION SCHEME (“ESOS”)
The Company implemented an ESOS on 1 September 2004 (“the Scheme”). The ESOS is governed by the by-laws which were approved
by the shareholders on 7 June 2004 and is effective for a period of 5 years from the date of approval.
The main features of the ESOS are as follows:
(a) The maximum number of ordinary shares, which may be allotted pursuant to the exercise of options under the Scheme, shall not
exceed ten per cent (10.0%) of the issued and paid-up share capital of the Company at any point in time during the duration of the
Scheme.
(b) The Option Committee may from time to time decide the conditions of eligibility to be fulfilled by an Eligible Person in order to
participate in the Scheme.
(c) The aggregate number of shares to be offered to any Eligible Person who has fulfilled the eligibility criteria for the time being by way
of options in accordance with the Scheme shall be at the discretion of the Option Committee. The Option Committee may consider
circumstances such as the Eligible Person’s scope of responsibilities, performance in the Group, rank or job grade, the number of
years of service that the Eligible Person has rendered to the Group, the Group’s retention policy and whether the Eligible Person
is serving under an employment contract for a fixed duration or otherwise. The Option Committee’s decision shall be final and
binding.
(d) The maximum number of shares allocated to Executive Directors, Non-Executive Directors and senior management by way of
options shall in aggregate not exceed fifty per cent (50.0%) of the total number of shares (or such other percentage as may be
permitted by the relevant regulatory authorities from time to time) available under the Scheme.
(e) The subscription price, in respect of options granted prior to the date of listing in Bursa Malaysia, shall be RM1.08 per share.
(f) The options granted are exercisable one year beginning from the date of grant.
The shares to be allotted and issued upon any valid exercise of options will, upon such allotment and issuance, rank pari passu
in all respects with the existing and issued shares except that such shares so issued will not be entitled to any dividends, rights,
allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of
such shares. The options shall not carry any right to vote at a general meeting of the Company.
The Company granted 93,240,000 options at an exercise price of RM1.08 per share under the ESOS scheme on 1 September 2004,
which expired on 6 June 2009. During the previous financial year ended 31 December 2009, the validity of this ESOS scheme was
extended to 6 June 2014.
At 31 December 2010, options to subscribe for 10,437,400 (2009: 26,460,900) ordinary shares of RM0.10 each at the exercise price
of RM1.08 per share remain unexercised. These options granted do not confer any right to participate in any share issue of any other
company.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
201
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
31 SHARE CAPITAL (CONTINUED)
EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONTINUED)
Set out below are details of options over the ordinary shares of the Company granted under the ESOS:
Exercise
Expiry price At At
Grant date date RM/share 1.1.2010 Granted Exercised Lapsed 31.12.2010
‘000 ‘000 ‘000 ‘000 ‘000
1 Sep 2004 6 June 2014 1.08 26,461 – 15,692 332 10,437
2010 2009
‘000 ‘000
Number of share options vested at balance sheet date 10,437 26,461
Details relating to options exercised during the financial year are as follows:
Quoted price
of shares Number
at share Exercise of shares
Exercise date issue date price issued
RM/share RM/share ‘000
January 2010 to March 2010 1.27–1.46 1.08 1,084
April 2010 to June 2010 1.11–1.43 1.08 604
July 2010 to September 2010 1.25–2.25 1.08 5,963
October 2010 to December 2010 2.12–2.74 1.08 8,041
15,692
2010 2009
RM’000 RM’000
Ordinary share capital at par 1,570 353
Share premium 15,378 3,464
Proceeds received on exercise of share options 16,948 3,817
Fair value at exercise date of shares issued 32,182 4,580
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
202
32 RETAINED EARNINGS
Under the single-tier tax system introduced by the Finance Act, 2007 which came into effect from the year of assessment 2008,
companies are not required to have tax credits under Section 108 of the Income Tax Act 1967 for dividend payment purposes. Dividends
paid under this system are tax exempt in the hands of shareholders.
Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 credits are
exhausted or 31 December 2013, whichever is earlier, unless they opt to disregard the Section 108 credits to pay single-tier dividends
under the special transitional provisions of the Finance Act, 2007.
As at 31 December 2010, the Company has sufficient Section 108 tax credits to pay approximately RM19.0 million (2009: RM19.0
million) of its retained earnings as franked dividends. The extent of the retained earnings not covered at that date amounted to RM2.08
billion (2009: RM1.13 billion).
In addition, the Company has tax exempt income as at 31 December 2010 amounting to approximately RM0.5 million (2009: RM0.5
million) available for distribution as tax exempt dividends to shareholders.
33 DIVIDEND
A first and final dividend in respect of the financial year ended 31 December 2010 of 3 sen (2009: Nil) per share, amounting to a
total dividend of RM76,860,918, is to be proposed at the forthcoming Annual General Meeting of the Company and will be paid to
shareholders registered in the Register of Members at the close of business on 20 June 2011, as follows:
2010 2009
Gross Amount Gross Amount
dividend of dividend dividend of dividend
per share net of tax per share net of tax
Sen RM’000 Sen RM’000
First and final dividend for the financial year
ended 31 December 2010:
Gross dividend of 0.91 sen less 25% tax 0.91 19,026 – –
Tax exempt dividend 0.02 528 – –
Single-tiered dividend 2.07 57,307 – –
3.0 76,861 – –
The financial statements do not reflect this dividend which will be accrued as a liability upon the approval by shareholders.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
203
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
34 COMMITMENTS
(a) Capital commitments not provided for in the financial statements are as follows:
Group and Company
2010 2009
RM’000 RM’000
Property, plant and equipment:
Approved and contracted for 12,829,657 16,234,759
Approved but not contracted for 7,931,251 8,492,282
20,760,908 24,727,041
Property, plant and equipment:
Share of a jointly controlled entity’s capital commitments 17,100 10,805
Share of an associate’s capital commitments 8,626 8,505
The capital commitments for the Group and Company are in respect of aircraft purchase and options to purchase aircraft.
(b) Non-cancellable operating leases
The future minimum lease payments and sublease receipts under non-cancellable operating leases are as follows:
Group and Company
2010 2009
Future Future Future Future
minimum minimum minimum minimum
lease sublease lease sublease
payments receipts payments receipts
RM’000 RM’000 RM’000 RM’000
Not later than 1 year 49,469 422,224 100,389 350,835
Later than 1 year and not later than 5 years 172,266 768,539 203,491 640,280
Later than 5 years 194,136 – 260,486 –
415,871 1,190,763 564,366 991,115
Sublease receipts include lease receipts from both owned and leased aircraft.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
204
35 CONTINGENT LIABILITIES
Thai AirAsia Co. Ltd (“TAA”), a jointly controlled entity of the Group, has contingent liabilities relating to guarantees issued by banks in
respect of the Company’s pilot trainees’ loans in accordance with the pilot professional course amounting to RM Nil million (31.12.2009:
RM5.0 million) which will be terminated when the student pilot earns a commercial pilot license and is assigned as co-pilot, or whenever
the pilot trainee can completely settle all outstanding debts with the bank. However, TAA can fully reclaim the said liabilities from the
pilot trainees’ guarantors as the guarantees have been pledged with TAA.
36 SEGMENTAL INFORMATION
Segmental information is as shown in the income statements, balance sheets and relevant notes as the Group’s sole business segment
is the provision of air transportation services.
The Group’s operations are conducted predominantly in Malaysia.
37 SIGNIFICANT RELATED PARTY TRANSACTIONS
The related party transactions of the Company comprise mainly transactions between the Company and its subsidiaries, jointly controlled
entity and associates. Details of these related companies are shown in Notes 13, 14 and 15 to the financial statements.
All related party transactions were carried out on agreed terms and conditions.
Key management personnel are categorised as head or senior management officers of key operating divisions within the Group and
Company. The key management compensation is disclosed in Note 37(e) below.
Related party transactions also include transactions with entities that are controlled, jointly controlled or significantly influenced directly
or indirectly by any key management personnel or their close family members, where applicable.
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
(a) Income:
Aircraft operating lease income for owned and
leased aircraft
– Thai AirAsia Co. Ltd 223,553 175,035 223,553 175,035
– PT Indonesia AirAsia 172,390 145,297 172,390 145,297
Services charged to AirAsia X Sdn Bhd, a company
with common Directors and shareholders 85,845 57,028 85,845 57,028
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
205
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
37 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
Group Company
2010 2009 2010 2009
RM’000 RM’000 RM’000 RM’000
(b) Recharges:
Maintenance and overhaul charges
– Thai AirAsia Co. Ltd 24,363 27,809 24,363 27,809
– PT Indonesia AirAsia 12,164 26,895 12,164 26,895
Loss on unwinding of derivatives
– Thai AirAsia Co. Ltd – 43,414 – 43,414
– PT Indonesia AirAsia – 46,330 – 46,330
(c) Receivables:
– AirAsia (Mauritius) Limited – – 422,415 194,503
– AirAsia International Limited – – 7,208 3,123
– Thai AirAsia Co. Ltd 99,802 366,388 – 171,885
– PT Indonesia AirAsia 268,058 445,776 268,058 445,776
– Crunchtime Culinary Services Sdn Bhd – – 2,757 –
– AirAsia Philippines Inc 12,292 11,191 12,292 11,191
– AirAsia X Sdn Bhd – 3,303 – 3,303
(d) Payables:
– AirAsia Go Holiday Sdn Bhd – – 44,251 27,922
– Thai AirAsia Co. Ltd – – 322,614 –
– Crunchtime Culinary Services Sdn Bhd – – – 1,133
– AirAsia Pte Limited – 3,382 5,223 3,382
– AirAsia X Sdn Bhd 41,262 – 41,262 –
(e) Key management compensation
– basic salaries, bonus and allowances 24,774 13,617 24,774 13,617
– defined contribution plan 2,730 1,455 2,730 1,455
27,504 15,072 27,504 15,072
Included in the key management compensation are Executive Directors’ remuneration as disclosed in Note 5.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
206
38 FINANCIAL RISK MANAGEMENT POLICIES
The Group’s financial risk management policy seeks to ensure that the financial resources that are available for the development of the
Group’s businesses are constantly monitored and managed vis-a-vis its ongoing exposure to fuel price, interest rate, foreign currency,
credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved and reviewed periodically by the
Board to minimise the effects of such volatility on its financial performance.
The policies in respect of the major areas of treasury activities are as follows:
(a) Market risk
(i) Fuel price risk
The Group is exposed to jet fuel price risk arising from the fluctuations in the prices of jet fuel. It seeks to hedge its fuel
requirements and implements various fuel management strategies in order to address the risk of rising fuel prices.
(ii) Interest rate risk
In view of the substantial borrowings taken to finance the acquisition of aircraft, the Group’s income and operating cash
flows are also influenced by changes in market interest rates. Interest rate exposure arises from the Group’s borrowings and
deposits and is managed by maintaining a prudent mix of fixed and floating rate debt and derivative financial instruments.
Derivative financial instruments are used, as far as possible and where appropriate, to generate the desired fixed interest rate
profile. Surplus funds are placed with reputable financial institutions at the most favourable interest rates.
The Group had previously entered into a number of immediate and forward starting interest rate swap contracts and cross
currency swap contracts that effectively converted its existing and future long-term floating rate debt facilities into fixed rate
debts. However, loans of approximately 3% of total long term debts are not currently covered by such swaps and have therefore
remained at floating rates that are linked to the London Inter Bank Offer Rate (“LIBOR”).
During the financial year, the Company has terminated a number of its interest rate swap contracts in view of the sharp decline
in both short-term and long-term interest rates.
At the same time, the Group has re-entered into new hedges via interest rate swaps and interest rate caps at lower rates.
Some of the interest rate swaps have been embedded into the relevant aircraft loans to provide fixed rate facilities.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
207
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
At 31 December 2010, if interest rate on USD denominated borrowings had been 60 basis points higher/lower with all other
variables held constant, the impact on the post-tax profit for the year and equity, as a result of an increase/decrease in the
fair value of the interest rate derivative financial instruments under cash flow hedges are tabulated below:
+60 basis points -60 basis points
RM’000 RM’000
Impact on post tax profits 12,559 (48,396)
Impact on equity 58,222 (65,511)
The remaining terms of the outstanding interest rate derivative contracts of the Company at 31 December 2010, which are
denominated in USD, are as follows:
2010 2009
RM’000 RM’000
equivalent equivalent
Later than 5 years:
Interest rate caps 635,877 768,188
Interest rate swaps 2,684,830 3,409,159
Cross currency interest rate swaps 198,491 213,413
3,519,198 4,390,760
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
208
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(ii) Interest rate risk (continued)
The net exposure of financial assets and liabilities of the Group and Company to interest rate cash flow risk and the periods in
which the borrowings mature are as follows:
Functional Effective
currency/ interest Total Floating Fixed interest rate
Financial currency at balance carrying interest 1 year > 1-2 > 2-3 > 3-4 > 4-5 More than
Instruments exposure sheet date amount rate or less years years years years 5 years
% per annum RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group and Company
31 December 2010
Deposits with
licensed bank RM/RM 2.62 719,439 – 719,439 – – – – –
Deposits with
fund management
companies RM/RM 2.64 103,319 – 103,319 – – – – –
Term loans RM/USD 4.09 (6,399,926) (178,157) (510,419) (528,744) (542,680) (562,542) (578,713) (3,498,671)
Finance lease RM/USD 5.50 (928,618) – (51,689) (54,958) (58,673) (62,515) (66,608) (634,175)
Commodity
Murabaha
Finance RM/USD 4.46 (108,307) – (9,067) (9,566) (10,094) (10,650) (11,237) (57,693)
Sukuk RM/RM 4.85 (420,000) – – – (420,000) – – –
Hire-purchase
payables RM/RM 3.75 (15) – (15) – – – – –
(7,034,108) (178,157) 251,568 (593,268) (1,031,447) (635,707) (656,558) (4,190,539)
31 December 2009
Deposits with
licensed bank RM/RM 2.95 391,478 – 391,478 – – – – –
Deposits with
fund management
companies RM/RM 2.54 100,627 – 100,627 – – – – –
Term loans RM/USD 4.15 (5,937,371) (105,393) (422,690) (432,527) (447,997) (458,119) (474,759) (3,595,886)
Finance lease RM/USD 5.48 (1,085,190) – (53,877) (57,405) (61,036) (65,161) (69,428) (778,283)
Commodity
Murabaha
Finance RM/USD 3.99 (117,347) – (8,760) (9,067) (9,566) (10,094) (10,650) (69,210)
Sukuk RM/RM 4.85 (420,000) – – – – (420,000) – –
Revolving credit RM/USD 4.10 (48,000) – (48,000) – – – – –
Hire-purchase
payables RM/RM 3.46 (72) – (56) (16) – – – –
(7,115,875) (105,393) (41,278) (499,015) (518,599) (953,374) (554,837) (4,443,379)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
209
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(a) Market risk (continued)
(iii) Foreign currency risk
The Group has subsidiaries and associates operating in foreign countries which generate revenue and incur costs denominated
in foreign currencies. The main currency exposures of the Group and Company are primarily in USD, Thai Baht and Indonesian
Rupiah. The Group has a natural hedge to the extent that payments for foreign currency payables are matched against
receivables denominated in the same foreign currency or whenever possible by intragroup arrangements and settlements.
The Company enters into forward foreign currency exchange contracts to limit its exposure on foreign currency receivables and
payables.
At 31 December 2010, if the currency had weakened/strengthened by 5% against the USD with all other variables held
constant, post-tax profit for the financial year would have been MYR201.4 million lower/higher, mainly as a result of foreign
exchange losses/gains on translation of USD denominated receivables and borrowings (term loan & finance lease). Similarly,
the impact on equity would have been RM3.7 million higher/lower due to the cash flow hedging in USD. The exposure to EUR
currency risk of the Group is not material and hence, sensitivity analysis is not presented.
(b) Credit risk
The Group’s exposure to credit risks or the risk of counterparties defaulting arises mainly from various deposits and bank balances,
receivables and derivative financial instruments. The maximum exposure to credit risks is represented by the total carrying amount
of these financial assets in the balance sheet.
Credit risks are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised by
monitoring receivables regularly. In addition, credit risks are also controlled as majority of the Group’s deposits and bank balances
and derivative financial instruments are placed or transacted with major financial institutions and reputable parties. The Directors
are of the view that the possibility of non-performance by the majority of these financial institutions is remote on the basis of their
financial strength and support of their respective governments.
The Group generally has no concentration of credit risk arising from trade receivables.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
210
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(c) Liquidity and cash flow risks
The Group’s policy on liquidity risk management is to maintain sufficient cash and to have available funding through adequate
amounts of committed credit facilities and credit lines for working capital requirements.
The table below analyses the Group’s non-derivative financial liabilities, gross-settled and net-settled derivative financial liabilities
into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table below are the contractual undiscounted cash flows.
At 31 December 2010
Under 1 year 1 – 2 years 2 – 5 years Over 5 years
RM’000 RM’000 RM’000 RM’000
Term loans 702,425 712,286 2,954,474 3,659,957
Finance lease liabilities 68,265 72,118 1,028,971 196,720
Commodity Murabaha finance 14,761 14,774 44,266 65,323
Sukuk 20,370 20,370 430,185 –
Trade and other payables 689,784 – – –
Derivative financial instruments
Net-settled derivatives
Trading 37,578 31,908 38,525 (891)
Hedging 72,865 64,260 75,806 2,892
Gross-settled derivatives
Trading – outflow 10,149 9,649 17,780 –
Trading – inflow (9,567) (9,095) (16,670) –
Hedging – outflow 366,035 362,625 1,080,724 1,793,982
Hedging – inflow (341,797) (339,837) (1,023,389) (1,700,988)
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
211
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
38 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain
an optimal capital structure so as to provide returns for shareholders and benefits for other stakeholders.
In order to optimise the capital structure, or the capital allocation amongst the Group’s various businesses, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, take on new debts or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital utilisation on the basis of the gearing ratio. This ratio is calculated as
total debts divided by total capital. Total debts are calculated as total borrowings (including “short term and long term borrowings” as
shown in the balance sheets). Total capital is calculated as the sum of ‘equity attributable to equity holders of the Company’ as shown
in the balance sheet and total debts.
The gearing ratio as at 31 December 2010 is as follows:
Group
2010
RM’000
Total borrowings 7,856,851
Total equity attributable to equity holders of the Company 3,640,960
Total capital 11,497,811
Gearing ratio 68.3%
39 FINANCIAL INSTRUMENTS
(a) Financial instruments by category
31 December 2010
Assets at
fair value
through Derivatives
Loans and the profit used for Available
receivables and loss hedging for sale Total
RM’000 RM’000 RM’000 RM’000 RM’000
Assets as per balance sheet
Available for sale financial assets – – – 152,942 152,942
Trade and other receivables
excluding prepayments 606,456 – – – 606,456
Derivative financial instruments – 23,306 2,238 – 25,544
Cash and cash equivalents 1,504,617 – – – 1,504,617
Total 2,111,073 23,306 2,238 152,942 2,289,559
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
212
39 FINANCIAL INSTRUMENTS (CONTINUED)
(a) Financial instruments by category (continued)
31 December 2010
Liabilities Other
at fair financial
value liabilities
through Derivatives at
the profit used for amortised
and loss hedging cost Total
RM’000 RM’000 RM’000 RM’000
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities) – – 6,928,233 6,928,233
Finance lease liabilities 928,618 928,618
Derivative financial instruments 108,752 344,113 – 452,865
Trade and other payables excluding statutory liabilities – – 959,428 959,428
Hire purchase payables – – 15 15
Total 108,752 344,113 8,816,294 9,269,159
1 Prepayments are excluded from the trade and other receivables balance, as this analysis is required only for financial
instruments.
2 Statutory liabilities are excluded from the trade payables balance, as this analysis is required only for financial instruments.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
213
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
39 FINANCIAL INSTRUMENTS (CONTINUED)
(b) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings
(if available) or to historical information about counterparty default rates:
2010
RM’000
Counterparties without external credit rating
Group 1 15,774
Group 2 102,909
Total unimpaired trade receivables and others receivables 118,683
Cash at bank and short-term bank deposits
AA2 to A- 1,398,674
BBB to B1 105,943
1,504,617
Derivative financial assets
AA+ 23,306
A 2,238
25,544
Loans to related parties
Group 2 380,152
Group 1 – New customers/related parties (Less than 6 months)
Group 2 – Existing customers/related parties (more than 6 months) with no defaults in the past.
Group 3 – Existing customers/related parties (more than 6 months) with some defaults in the past.
All defaults were fully recovered.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
214
40 CHANGES IN ACCOUNTING POLICIES
(i) The effects of the changes in accounting policies to each of the line items in the Group’s and Company’s balance sheets are as
follows:
Balances as at 1 January 2010
As previously
stated FRS 139 As restated
RM’000 RM’000 RM’000
Group
Other investments 26,667 (26,667) –
Available-for-sale financial assets – 132,663 132,663
Derivative financial instruments – (130,645) (130,645)
Amount due from a jointly controlled entity 366,388 (15,462) 350,926
Amounts due from associates 456,967 (16,841) 440,126
Retained earnings (1,138,438) 97,278 (1,041,160)
Cash flow hedge reserve – 65,670 65,670
Available-for-sale reserve – (105,996) (105,996)
Company
Other investments 26,667 (26,667) –
Available-for-sale financial assets – 132,663 132,663
Derivative financial instruments – (130,645) (130,645)
Retained earnings (1,138,438) 97,278 (1,041,160)
Cash flow hedge reserve – 65,670 65,670
Available-for-sale reserve – (105,996) (105,996)
(ii) Impact on the Group’s and the Company’s statements of comprehensive income:
Increase/(decrease) for the
financial year ended
31 December 2010
FRS 139 Total
RM’000 RM’000
Other comprehensive income:
Available-for-sale financial assets 4,279 4,279
Cash flow hedges (5,639) (5,639)
Foreign currency translation differences (107) (107)
The adoption of FRS 139 has no significant effect on the results of the Company for the financial year ended 31 December 2010.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
215
NOTES TO THE
FINANCIAL
STATEMENTS
– 31 DECEMBER 2010
41 SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES LISTING REQUIREMENT
The following analysis of realised and unrealised retained profits at the legal entity level is prepared in accordance with the Guidance
on Special Matter No. 1 – Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. This disclosure is based on the
format prescribed by Bursa Malaysia Securities Berhad.
Group Company
As at As at
31.12.2010 31.12.2010
RM’000 RM’000
Total retained earnings of AirAsia Berhad and its subsidiaries:
– Realised 997,581 981,345
– Unrealised 1,121,156 1,121,156
2,118,737 2,102,501
Total share of accumulated losses from associated companies:
– Realised (4,112) –
– Unrealised – –
Total share of accumulated losses from jointly controlled entities
– Realised (12,054) –
– Unrealised – –
Total retained earnings as per consolidated financial statements 2,102,571 2,102,501
The disclosure of realised and unrealised profits above is solely for compliance with the directive issued by the Bursa Malaysia Securities
Berhad and should not be applied for any other purposes.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
216
STATEMENT BY
DIRECTORS
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
STATUTORY
DECLARATION
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
We, Dato’ Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin bin Meranun, being two of the Directors of AirAsia Berhad, state that, in
the opinion of the Directors, the financial statements set out on pages 140 to 216 are drawn up so as to give a true and fair view of the
state of affairs of the Group and Company as at 31 December 2010 and of the results and the cash flows of the Group and Company for the
financial year ended on that date in accordance with the provisions of the Companies Act, 1965 and the Financial Reporting Standards, the
MASB approved accounting standards in Malaysia for Entities Other than Private Entities.
In accordance with a resolution of the Board of Directors dated 28 April 2011.
DATO’ SRI DR. ANTHONY FRANCIS FERNANDES DATO’ KAMARUDIN BIN MERANUN
DIRECTOR DIRECTOR
I, Rozman bin Omar, the Officer primarily responsible for the financial management of AirAsia Berhad, do solemnly and sincerely declare that
the financial statements set out on pages 140 to 216 are, in my opinion, correct and I make this solemn declaration conscientiously believing
the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Rozman bin Omar
Subscribed and solemnly declared by the abovenamed Rozman bin Omar at Petaling Jaya in Malaysia on 28 April 2011 before me.
COMMISSIONER FOR OATHS
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
217
INDEPENDENT
AUDITORS’ REPORT
TO THE MEMBERS OF AIRASIA BERHAD (Incorporated in Malaysia) (Company No. 284669-W)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of AirAsia Berhad on pages 140 to 215, which comprise the balance sheets as at 31 December
2010 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash flows of the Group
and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set
out on Notes 1 to 40.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with
MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965, and for such internal
control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with MASB approved accounting standards in Malaysia
for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group
and of the Company as of 31 December 2010 and of their financial performance and cash flows for the financial year then ended.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of
which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 13 to the financial statements.
c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes.
d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
218
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 41 on page 216 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and
is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysia Institute of Accountants (“MIA Guidance”) and the directive of
Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the
MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS SRIDHARAN NAIR
(No. AF: 1146) (No. 2656/05/12 (J))
Chartered Accountants Chartered Accountant
Kuala Lumpur
28 April 2011
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
219
ANALYSIS OF
SHAREHOLDINGS
AS AT 21 APRIL 2011
DISTRIBUTION OF SHAREHOLDERS
Class of shares: Ordinary shares of RM0.10 each (“Shares”)
Voting rights: One vote per ordinary shares
Shareholdings
No. of
Shareholders
% of
Shareholders
No. of
Shares
% of
Issued Share
Capital
Less than 100 87 0.48 1,749 0.00
100 – 1,000 5,615 30.92 5,032,755 0.18
1,001 – 10,000 10,112 55.68 41,522,944 1.50
10,001 – 100,000 1,720 9.47 51,047,740 1.84
100,001 to less than 5% of issued shares 624 3.43 1,882,438,015 67.82
5% and above of issued shares 3 0.02 795,480,877 28.66
18,161 100.00 2,775,524,080 100.00
SUBSTANTIAL SHAREHOLDERS
The direct and indirect shareholdings of the shareholders holding more than 5% in AirAsia Berhad based on the Register of Substantial
Shareholders are as follows:-
Name
DIRECT INDIRECT
No. of
Shares Held
% of
Issued Shares
No. of
Shares Held
% of
Issued Shares
Tune Air Sdn. Bhd. 729,458,382
(1)
26.28 – –
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010
(2)
0.09 729,458,382
(3)
26.28
Dato’ Kamarudin bin Meranun 1,692,900 0.06 729,458,382
(3)
26.28
Employees Provident Fund Board 219,758,900
(4)
7.92 30,392,500 1.09
Genesis Smaller Companies 150,635,581
(5)
5.43 – –
Wellington Management Company, LLP 153,265,415
(6)
5.52 – –
NOTES:
(1)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd., ECML Nominees (Tempatan) Sdn. Bhd., HSBC Nominees (Tempatan) Sdn.
Bhd., and Mayban Nominees (Tempatan) Sdn. Bhd.
(2)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd.
(3)
Deemed interested by virtue of Section 6A of the Companies Act, 1965 (“the Act”) through a shareholding of more than 15% in Tune
Air Sdn. Bhd.
(4)
Shares held under own name (1,500,000 shares) and Citigroup Nominees (Tempatan) Sdn. Bhd. (218,258,900 shares)
(5)
Shares held under HSBC Nominees (Asing) Sdn. Bhd.
(6)
Shares held under Cartaban Nominees (Asing) Sdn. Bhd., Citigroup Nominees (Asing) Sdn. Bhd., Goldman Sachs International, HSBC
Nominees (Asing) Sdn. Bhd., JP Morgan Chase Bank N.A., Master Trust Bank of Japan Ltd., Mellon Bank N.A., and RBC Dexia Investor
Services.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
220
DIRECTORS’ SHAREHOLDINGS
The interests of the Directors of AirAsia in the Shares and options over shares in the Company and its related corporations based on the
Company’s Register of Directors’ Shareholdings are as follows:-
Name
No. of
Shares Held
% of
Issued Shares
No. of
Shares Held
% of
Issued Shares
Dato’ Sri Dr. Anthony Francis Fernandes 2,627,010
(1)
0.09 729,458,382
(2)
26.28
Dato’ Kamarudin bin Meranun 1,692,900 0.06 729,458,382
(2)
26.28
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar – – – –
Conor Mc Carthy 14,125,903
(3)
0.51 – –
Dato’ Leong Sonny @ Leong Khee Seong 100,000 -* – –
Dato’ Fam Lee Ee 100,000 -* – –
Datuk Alias bin Ali – – – –
Dato’ Mohamed Khadar bin Merican – – – –
Mohd Omar bin Mustapha – – – –
NOTES:
* Negligible.
(1)
Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd.
(2)
Deemed interested by virtue of Section 6A of the Act, through a shareholding of more than 15% in TASB
(3)
Shares held under own name (100,000 shares) and HSBC Nominees (Asing) Sdn. Bhd. Exempt AN for Credit Suisse (SG BR-TST-Asing)
(14,025,903 shares)
The interests of Directors in options over unissued ordinary shares of RM0.10 each of the Company:
Shareholdings
Price
per option share
No. of
Option Shares
Dato’ Sri Dr. Anthony Francis Fernandes RM1.08 600,000
Dato’ Kamarudin bin Meranun RM1.08 600,000
# The options held over ordinary shares in the Company were granted on 1 September 2004 pursuant to the Company’s Employee Share
Option Scheme (“ESOS”) approved by the shareholders on 7 June 2004. On 28 May 2009, the Company extended the duration of its
ESOS which expired on 6 June 2009 for 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws. The ESOS
extension was not subject to any regulatory or shareholders approval.
None of the Directors have any interests in the shares or options of the subsidiaries of the Company other than as disclosed above.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
221
LIST OF TOP 30
SHAREHOLDERS
AS AT 21 APRIL 2011
No Name Of Shareholders No. Of Shares Held
% Of Issued
Share Capital
1. Tune Air Sdn. Bhd. 420,786,396 15.16
2. Citigroup Nominees (Tempatan) Sdn. Bhd.
Employees Provident Fund Board
224,058,900 8.07
3. HSBC Nominees (Asing) Sdn. Bhd.
BBH (LUX) SCA for Genesis Smaller Companies
150,635,581 5.43
4. Cartaban Nominees (Asing) Sdn. Bhd.
SSBT Fund HG05 for the New Economy Fund
135,334,000 4.88
5. HSBC Nominees (Asing) Sdn. Bhd.
TNTC for The Nomad Investment Partnership LP Cayman
115,000,000 4.14
6. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for JPMorgan Chase Bank, National Association (U.S.A.)
74,232,150 2.67
7. Mayban Nominees (Tempatan) Sdn. Bhd.
Kuwait Finance House (Malaysia) Berhad for Tune Air Sdn. Bhd. (Tony Fernandes)
71,000,000 2.56
8. Cartaban Nominees (Asing) Sdn. Bhd.
SSBT Fund HG22 for Smallcap World Fund, Inc.
64,000,000 2.31
9. HSBC Nominees (Asing) Sdn. Bhd.
NTGS LDN for Skagen Kon-Tiki Verdipapirfond
62,078,300 2.24
10. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
58,000,000 2.09
11. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
48,335,367 1.74
12. HSBC Nominees (Tempatan) Sdn. Bhd.
Credit Suisse HK for Tune Air Sdn. Bhd.
40,000,000 1.44
13. Cartaban Nominees (Asing) Sdn. Bhd.
Exempt an for State Street Bank & Trust Company (West CLT OD67)
39,255,800 1.41
14. HSBC Nominees (Tempatan) Sdn. Bhd.
Six Sis for Tune Air Sdn. Bhd.
35,000,000 1.26
15. Valuecap Sdn. Bhd. 26,597,900 0.96
16. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for Morgan Stanley & Co. Incorporated (Client)
25,996,100 0.94
17. Mayban Nominees (Tempatan) Sdn. Bhd.
Mayban Trustees Berhad for Public Ittikal Fund (N14011970240)
24,429,800 0.88
18. Citigroup Nominees (Asing) Sdn. Bhd.
CBLDN for Kuwait Investment Authority
23,459,500 0.85
19. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
22,586,619 0.81
20. Mayban Nominees (Tempatan) Sdn. Bhd.
Mayban Trustees Berhad for Public Regular Savings Fund (N14011940100)
22,487,700 0.81
21. HSBC Nominees (Asing) Sdn. Bhd.
BBH And Co Boston for Vanguard Emerging Markets Stock Index Fund
21,550,848 0.78
22. CIMSEC Nominees (Tempatan) Sdn. Bhd.
CIMB Bank for Tune Air Sdn. Bhd. (SFD)
20,000,000 0.72
23. Amanahraya Trustees Berhad
Public Islamic Optimal Growth Fund
17,302,800 0.62
24. Amanahraya Trustees Berhad
Public Islamic Sector Select Fund
17,048,500 0.61
25. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for The Bank of New York Mellon (Mellon Acct)
16,309,723 0.59
26. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for JPMorgan Chase Bank, National Association (U.K.)
15,153,390 0.55
27. HSBC Nominees (Asing) Sdn. Bhd.
Exempt an for Credit Suisse (SG BR-TST-Asing)
14,990,603 0.54
28. AMSEC Nominees (Tempatan) Sdn. Bhd.
AmTrustee Berhad for CIMB Islamic Dali Equity Growth Fund (UT-CIMB-Dali)
14,715,400 0.53
29. Cartaban Nominees (Asing) Sdn. Bhd.
BBH (LUX) SCA for Fidelity Funds ASEAN
13,832,700 0.50
30. ECML Nominees (Tempatan) Sdn. Bhd.
Pledged Securities Account for Tune Air Sdn. Bhd. (001)
13,750,000 0.50
PAGE >
222
AIRASIA BERHAD
ANNUAL REPORT
2010
LIST OF
PROPERTIES HELD
Save as disclosed below, as at 31 December 2010, neither the Company nor any of its subsidiaries owned any land or building:
Owner of
building
Postal address/
location of
building
Description/
existing use of
building
Tenure/
date of expiry
of lease
Build-up area
Approximate
age of building
Audited net
book value
as at 31
December 2010
(RM’000)
AirAsia
Berhad
Taxiway Charlie,
KLIA (part of
PT 39 KLIA,
Sepang)
See note 1
Non permanent
structure/
aircraft
maintenance
hangar
See note 2 2,400 sqm 7 years and 5
months
1,802
AirAsia
Berhad
AirAsia
Academy,
Lot PT 25B,
Southern
Support Zone,
KLIA 64000
Sepang,
Selangor
AirAsia
Simulator
Complex
30 years from
20 September
2004 to 19
September
2034
4,997 sqm 6 years 10,810
AirAsia
Berhad
AirAsia
Academy,
Lot PT 25B,
Southern
Support Zone,
KLIA 64000
Sepang,
Selangor
AirAsia
Academy,
Engineering
and In-Flight
Warehouse
30 years from
1 May 2007 to
30 April 2037
6,225 sqm
- Academy
5,255 sqm -
Engineering/
In-Flight
Warehouse
3 years 24,775
Notes:
(1) On the fitness of occupation of the hangar, it is the subject of a year-to-year “Kelulusan Permit Bangunan Sementara” issued by
the Majlis Daerah Sepang. The permit has been renewed and will expire on 31 December 2011.
(2) The land area occupied is approximately 2,400 square meters. The land is owned by Malaysia Airports (Sepang) Sdn. Bhd.
(“MAB”) and the Company has an automatic renewal of tenancy on a month to month basis.
Revaluation of properties has not been carried out on any of the above properties to date.
PAGE >
223
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP
DIRECTORY
CAMBODIA
PHNOM PENH
Phnom Penh Airport office
17 Mezzanine Floor of Arrival
Domestic Terminal,
Phnom Penh Airport, Phnom Penh
CHINA
MACAU
Office 20, Mezzaninne Level
Passenger Terminal, Macau
International Airport Taipa,
Macau
SHENZHEN
Junting Hotel Shenzhen, XY-10,
Shenzhen Eastern Road,
Shenzhen
INDONESIA
ACEH
Bandara Sultan Iskandar Muda,
Blang Bintang, Aceh
BALI
Bandara I Gusti Ngurah Rai,
Terminal Keberangkatan
International Bali 80361
Jl. Legian Kaja No. 455 Kuta,
Bali
BANDUNG
Ruangan Nombor 34
Bandara Husein Sastranegara
Jalan Pajajaran No 156 Bandung
Jawa Barat
Lobby Grand Serela Hotel
Jl. L.L. R.E Martadinata (Riau)
No. 56 Telp. (022) 426 1636
BATAM
Jl. imam Bonjol,
Gedung Jamsotek/
Graha Nagoya Mas
JAKARTA
Terminal 3 & Terminal 2D
Departure hall Airlines Offices
Soekarno-Hatta International
Airport Cengkareng
Jl. Boulevard Raya, Blok LA 4,
No. 10 Kelapa Gading
Jakarta Utara
Jln. Panglima Polim,
No. 105B Blok M, Jakarta Selatan
MAKASSAR
Depature terminal,
Sultan Hasanuddin
International Airport,
Makasar – South Sulawesi
Indonesia
Mall Panakukang,
Carrefour Panakukang,
3rd Floor, Jl. Adyaksa Baru
No. 1, Makassar – South Sulawesi
Indonesia
MANADO
Sam Ratulangi International Airport
Jalan A.A. Maramis,
Manado 95374
MEDAN
Bandara Polonia Terminal
Keberangkatan Internasional,
Medan 20157 Sumatra
Garuda Plaza Hotel
Jl. Sisigamangaraja
N0.18 Medan - 20213
PADANG
Hotel Hangtuah,
Jl. Pemuda No. 1 Padang Sumatra Barat,
25117
PALEMBANG
Sultan Mahmud Badaruddin II
Airport Palembang, South Sumatra
PEKAN BARU
Sultan Syarif Kasim II International Airport,
Jalan Perhubungan Udara Simpang Tiga,
Pekanbaru
SOLO
Adi Sumarmo International Airport,
Surakarta 57108
SURABAYA
Lobby International Terminal
Juanda International Airport
Jalan Raya Juanda Surabaya
Jawa Timur
YOGYAKARTA
Adisutjipto International Airport
Jln. Solo km.9, Yogyakarta, 55282
Melia Purosani Hotel
Jl Suryotomo No. 31
Yogyakarta
MALAYSIA
JOHOR
Lot No. 162, Festive Street Mall,
Danga Bay, Jalan Skudai,
Johor Bahru
GL 13 Sultan Ismail Airport
81250 Johor Bahru, Johor
KEDAH
LOT 20, Lapangan Terbang Sultan Abdul
Halim, 06200 Kepala Batas, Alor Setar,
Kedah
Langkawi International Airport
07100 Padang Mat Sirat
Langkawi
KUALA LUMPUR
Unit 11, Level 1 Stesen Sentral
Kuala Lumpur, 50470
KELANTAN
Ground Floor,
Lapangan Terbang Sultan Ismail Petra
16100 Pengkalan Chepa
Kota Bharu, Kelantan Darul Naim
TERENGGANU
Lot No. 15 & 17, Terminal Building, Sultan
Mahmud Airport 21300 Kuala Terengganu,
Terengganu
LABUAN
Level 1, Labuan Airport Terminal
87008 Wilayah Persekutuan,
Labuan
PENANG
Lot 3, Departure Concourse,
Penang International Airport
11900 Bayan Lepas, Pulau Pinang
Ground Floor, Kim Mansion 332,
Chulia Street, 10200 Penang
PAGE >
224
AIRASIA BERHAD
ANNUAL REPORT
2010
GROUP
DIRECTORY
SABAH
Lot 1& 2, 1st Floor, Terminal Building,
Sandakan Airport, 90719 Sandakan Sabah
FL4, 1st Floor, Tawau Airport Building,
Jalan Apas-Balung, 91100 Tawau,
Sabah
TB228, Lot 5, Ground Floor,
Jalan Bunga, Fajar Complex
91000 Tawau, Sabah
Lot G24, Ground Floor,
Wisma Sabah, Jln. Tun Razak,
88000, Kota Kinabalu, Sabah
T2: Ground Floor, Terminal 2
Kota Kinabalu Int. Airport
Old Airport Road, Tanjung Aru
88100, Kota Kinabalu, Sabah
SARAWAK
Lot GL.14, Public Concourse
Terminal Building, Bintulu Airport
97000 Bintulu Sarawak
1st Floor, Miri Airport,
98000 Bintulu, Sarawak
GF Lot 946, Block 9, Miri
Concession Land District,
98000 Miri, Sarawak
Ground Floor,
Kuching International Airport,
93756 Kuching, Sarawak
Wisma Ho Ho Lim, Ground Floor
No. 291, Sub Lot 4, Jalan Abell
93100 Kuching, Sarawak
1st Floor, Main Terminal Building
Sibu Airport,
96000 Sibu, Sarawak
SELANGOR
Ground Floor, Terminal 3,
Sultan Abdul Aziz Shah Airport
47200 Subang, Selangor
Jalan KLIA S3,
Southern Support Zone,
Kuala Lumpur International Airport,
64000 Sepang, Selangor
MYANMAR
YANGON
Yangon International Airport
Office Unit# 01-L, Parkroyal
Yangon, Myanmar
SINGAPORE
Row No:11, Departure level 2,
Singapore Changi Airport
Terminal 1, Singapore
111 North Bridge Road #01-36/37
Peninsula Plaza 179098, Singapore
THAILAND
BANGKOK
Suvarnabhumi International Airport
Room A1-062 Ground Floor,
Concourse A, Bangna-Trad Road,
Racha Teva, Bang Pli, Samutprakam 10540
127 Tanao Road, Phra Nakorn,
Bangkok 10200
CHIANG MAI SALES OFFICE
Chiang Mai International Airport
60, 1st Floor,
Tambol Sutep, Amphur Muang,
Chiang Mai 50200
416 Thaphae Road,
Chiang Mai
CHIANG RAI
Chiang Rai International Airport
2305/2 404 Moo 10, Tambol Bandu,
Amphur Muang, Chiang Rai 57100
HAT YAI
Hat Yai International Airport
125 Hadyai International Airport,
Moo 3 Klongla, Klonghoikong,
Songkhla 90115
KRABI
133 Moo 5 Petchkasem Road,
Tambol Nuakrong, Amphur
Nuakrong, Krabi 81130
NARATHIWAT
Narathiwat Airport
330 Moo 5, Tambol kok-Kian,
Amphur Muang, Narathiwat 96000
PHUKET
Phuket Internatinal Airport
312, 3rd Floor, Tumbol Maikao,
Amphur Thalang, Phuket 83110
Unit 9, Laflora Patong Area,
No. 39, 39/1, Thaveewong Rd.,
Patong, Kratoo, Phuket
SURAT THANI
Surat Thani International Airport
73 Moo 3 Tambol Huatuey,
Amphur Punpin,
Suratthani 84130
UBON RATCHATHANI
Ubon Ratchathani Airport
224 Moo 1, Tambol Makkhang,
Amphur Muang, Udon Thani 41000
VIETNAM
Hanoi
Noibai International Airport
Lobby A, 3rd Floor,
Hanoi, Vietnam
No. 30 Le Thai To Str.,
Hoan Kiem Dist.,
Hanoi City
HO CHI MINH SALES OFFICE
Van Phong Ban Ve Tp Hcmc
254 De Tham,
P.Pham Ngu Lao,
District 1,
Ho Chi Minh City
PAGE >
225
AIRASIA BERHAD
ANNUAL REPORT
2010
GLOSSARY
AirAsia Berhad “The Company” or “AirAsia”.
Aircraft at end of period
Number of aircraft owned or on lease arrangements of over one month’s duration
at the end of the period.
Aircraft utilisation Average number of block hours per day per aircraft operated.
Available Seat Kilometres (ASK) Total seats flown multiplied by the number of kilometres flown.
Average fare Passenger seat sales, surcharges and fees divided by number of passengers.
Block hours
Hours of service for aircraft, measured from the time that the aircraft leaves the
terminal at the departure airport to the time that it arrives at the terminal at the
destination airport.
Capacity The number of seats flown.
Cost per ASK (CASK) Revenue less operating profit divided by available seat kilometres.
Cost per ASK, excluding fuel
(CASK ex fuel)
Revenue less operating profit and aircraft fuel expenses, divided by available seat
kilometres.
Load factor Number of passengers as a percentage of capacity.
Passengers carried
Number of earned seats flown. Earned seats comprises seats sold to passengers
(including no-shows), seats provided for promotional purposes and seats provided
to staff for business travel.
Revenue per ASK (RASK) Revenue divided by available seat kilometres.
Revenue Passenger Kilometres (RPK) Number of passengers multiplied by the number of kilometres those passengers
have flown.
Stage A one-way revenue flight.
AIRASIA BERHAD
ANNUAL REPORT
2010
PAGE >
226
FORM
OF PROXY
I/We ______________________________________________________________________________ NRIC No./Co No.: _______________________
(FULL NAME IN BLOCK LETTERS) (COMPULSORY)
of __________________________________________________________________________________________________________________________
(ADDRESS)
__________________________________________________________________________________________________________________________ being a
(ADDRESS)
member of AIRASIA BERHAD (“the Company”) hereby appoint ____________________________________________________________________
(FULL NAME IN BLOCK LETTERS)
NRIC No.: _____________________________ of ___________________________________________________________________________________
(COMPULSORY) (ADDRESS)
_______________________________________________________________________________________________________________________________
(ADDRESS)
and/or ____________________________________________________________________________ NRIC No.: _____________________________ of
(FULL NAME IN BLOCK LETTERS) (COMPULSORY)
____________________________________________________________________________________________________ as my/our proxy(ies) to
(ADDRESS)
vote in my/our name and on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held on Monday, 20 June 2011
at 10.00 a.m. and at any adjournment of such meeting and to vote as indicated below:
ORDINARY RESOLUTION DESCRIPTION FOR AGAINST
No. 1 Ordinary Business
Receive the Audited Financial Statements and Reports
No. 2 Declaration of First and Final Dividend
No. 3 Approval of Directors’ Fees
No. 4 Re-election of Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar
No. 5 Re-election of En. Mohd Omar bin Mustapha
No. 6 Re-appointment of Dato’ Leong Sonny @ Leong Khee Seong
No. 7 Re-appointment of Auditors
No. 8
Special Business
Authority to allot shares pursuant to Section 132D of the Companies Act, 1965
(Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting as he thinks fit)
No. of shares held:
CDS Account No.:
The proportion of my/our holding to be First Proxy :__________%
represented by my/our proxies are as follows: Second Proxy:__________%
Date:
_____________________________________________
Signature of Shareholder/Common Seal
Notes to Form of Proxy
a. Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Article 43(1) of the Company’s Articles of Association, only those
Foreigners (as defined in the Articles) who hold shares up to the current prescribed foreign ownership limit of 45.0% of the total issued and paid-up capital, on a first-in-time
basis based on the Record of Depositors to be used for the forthcoming Annual General Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not entitled to
vote, will similarly not be entitled to vote. Consequently, all such disenfranchised voting rights shall be automatically vested in the Chairman of the forthcoming Annual General
Meeting.
b. A member entitled to attend and vote is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative), to attend and vote in his stead. A proxy need
not be a member of the Company.
c. The Proxy Form in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either under its common seal or under the hand
of an officer or attorney duly authorised.
d. Where a member appoints two proxies, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.
e. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 it may appoint at least one but not more
than two (2) proxies in respect of each securities account it holds to which ordinary shares in the Company are credited.
f. The Proxy Form or other instruments of appointment shall not be treated as valid unless deposited at the Registered Office of the Company at 25-5, Block H, Jalan PJU 1/37,
Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time set for holding the meeting. Faxed copies of the duly
executed form of proxy are not acceptable.
AIRASIA BERHAD
284669-W
(INCORPORATED IN MALAYSIA)
Fold here
Fold here
Company Secretary
AirAsia Berhad (Company No. 284669-W)
25-5, Block H, Jalan PJU 1/37
Dataran Prima
47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Stamp
www. ai r asi a. com
AirAsia Berhad (284669-W)
LCC Terminal, Jalan KLIA S3, Southern Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan, Malaysia
T +603 8660 4333 F +603 8775 1100
E [email protected]
doc_596912727.pdf