Contents :

AirAsia is pleased to announce that, in connection with FAX's business expansion plans, an MOU was entered into between AirAsia and FAX today, 5 January 2007.

The MOU entered into, records the basic understanding between AirAsia and FAX for the conduct of good faith discussions towards formalising definitive agreement (s) for the purposes contemplated therein, as outlined below:

1) FAX has been granted permission by the Malaysian Ministry of Transport to operate long haul international air services which it intends to operate and market under the "AirAsia" brand name and in consideration of which FAX shall pay AirAsia an appropriate licence fee or royalty.

2) FAX has further invited AirAsia to participate in 20% of the equity of FAX via a capital injection at par value in FAX on the basis that FAX's future prospects will be significantly improved as a long haul carrier and that FAX's existing Turboprop Operations will only be a small part of its total operations.

AirAsia and FAX will enter into the relevant definitive agreement(s) upon the conclusion of negotiations and the parties finalising the details of the proposed transactions. The MOU will otherwise terminate six (6) months of its execution or on such other dates the parties may agree in writing. Either party may also terminate the MOU upon giving one (1) month's written notice.

FAX, a private limited company, is a commercial airline currently plying domestic routes within Sabah and Sarawak. Dato' Anthony Francis Fernandes and Dato' Kamarudin Bin Meranun are directors and shareholders of FAX with a 10% and 50% equity interest respectively. As both are also directors and major shareholders of AirAsia, they are deemed interested in the MOU. Dato' Anthony Francis Fernandes and Dato' Kamarudin Bin Meranun have previously abstained and will continue to abstain from all Board deliberations in respect of the MOU.

The interested directors' and interested major shareholders' direct and indirect shareholdings in AirAsia as at 4 January 2007 are as set out in the table below:

	Direct	Indirect
	No. of Shares %	No. of Shares %
Dato’ Anthony Francis Fernandes	2,627,010 0.11	769,458,3821 32.70
Dato’ Kamarudin Bin Meranun	100,000 *	769,458,3821 32.70


Notes:
* Negligible
¹ Deemed interested by virtue of Section 6A of the Companies Act, 1965, through a shareholding of more than 15% in Tune Air Sdn Bhd

Save as disclosed above, no other directors and/or major shareholders of AirAsia and/or persons connected with them have any interest, whether directly or indirectly, in the MOU.

Save for the above interested directors (who had abstained), the Board having considered all the relevant factors in respect of the MOU is of the opinion that the MOU is in the best interest of AirAsia.

This announcement is dated 5 January 2007.

Announcement Info