KUALA LUMPUR: AirAsia Bhd has dismissed a recent media report suggesting it is in talks to merge with its long-haul, low-cost affiliate AirAsia X Bhd (AAX).

AirAsia group chief executive officer Tan Sri Tony Fernandes said the matter was never brought to its board of directors and management for deliberation, and the airline continues to hold the view that both the short- and long-haul operations should be kept separated.

“AirAsia’s position is very clear. The board has never discussed this [matter] and there is no merger at all,” he told reporters after the airline’s annual general meeting yesterday. “The whole purpose of setting up AAX as a separate company was because we believed it should be separated, and 10 years on we still believe that it should be separated. The short-haul business is very different from the long-haul business. So for AirAsia, we can categorically say that there is no plan for a merger [with AAX],” said Fernandes.

Last week, AirAsia executive chairman Datuk Kamarudin Meranun was reported as saying by a business weekly that AirAsia and AAX could see a possible merger as such an idea had been floated in the past. Kamarudin yesterday clarified that “it is too premature to talk about it yet” and that AAX should remain focused on improving its profitability. “At AirAsia, everything is possible. But I made it very clear that we should focus on AAX’s profitability strength first, and that the [merger] issue has never been discussed at the board [level],” he said.

On AirAsia’s China venture, Fernandes said it represents the first stage of establishing an airline there. “It is the first stage and we are very proud and excited about it. There are many stages; we’ve been through that in India. There should be something by the end of this year. I can’t talk for the other airlines, but all over the world, airlines have been lobbying against us, but we still did it,” he said. On May 15, AirAsia signed a memorandum of understanding with China Everbright Group and the Henan Government Working Group to establish a low-cost carrier in China. The parties plan to incorporate AirAsia China in Henan’s capital city Zhengzhou, which is intended to be the headquarters of the Chinese budget airline.

On the performance of AAX, which saw its net profit for the first quarter ended March 31, 2017 (1QFY17) plunge 94.2% year-on-year, Fernandes said the airline is expected to perform even better as early as 3QFY17. Fernandes is also confident that AAX’s upcoming new route to Hawaii in the US will be profitable, allaying concerns that the low fares may not be sufficient to cover its cost.