Contents :

1. INTRODUCTION

AirAsia Berhad (hereinafter referred to as "the Company" or "AirAsia") is pleased to announce that the Board of Directors had approved the extension of an airline consultancy agreement ("Agreement") with Wordison Limited trading as PlaneConsult.com Pte Ltd ("Wordison") for another term of one year and it is renewed upon mutually acceptable terms for the description of service as stipulated below.

Mr. Conor McCarthy, a Non-Executive Director of the Company, together with his wife, own the entire share capital of Wordison consisting of two shares.


2. DESCRIPTION OF SERVICE

Wordison’s services relate to, among others, providing advice and consultancy on Low Cost Airline operations, fleet acquisition, route planning, aero politics, regulatory factors, market demographics, competitive positioning/scenarios and financial requirements ("Services"). There shall be no change to the description of the Services that has been provided to the Company since 10th May 2002.

3. BASIS OF CONSIDERATION

Wordison shall be paid an aggregate annual consideration of RM943,580.76 ("Fee") (subject to the fluctuations of interest rates) for the duration of the Agreement and Wordison shall be reimbursed for expenses directly related to duty travel during visit or stay with AirAsia or during a visit by AirAsia staff, suppliers, agents or officers with Wordison at their premises. The Fee charged is mutually agreed by AirAsia and Wordison on an arm's length basis and based on market value.

4. FINANCIAL EFFECTS

4.1 Share capital and substantial shareholders' shareholding

The Agreement would not have any effect on the issued and paid up share capital of AirAsia nor the substantial shareholders' shareholdings of AirAsia.

4.2 Earnings
The Agreement would not have any material impact on the prospective earnings and the earnings per share of AirAsia Group for the financial year ending 31st December 2007.

4.3 Net Assets ("NA")
The Agreement would not have any material effect on the prospective NA of AirAsia Group for the financial year ending 31st December 2007.

4.4 Gearing
The Agreement would not have any impact on the prospective gearing of AirAsia Group for the financial year ending 31st December 2007.

The Agreement will not pose any adverse effect to the day to day operations of the Company.


5. RATIONALE OF ENTERING INTO THE AGREEMENT

AirAsia is entering into the Agreement to benefit from Services which could augment and supplement the Company’s continuing efforts to operate efficiently and effectively, to respond to competition and maintain its position as the leading low cost carrier in the Asian region and maximize its growth potential, profits and shareholder value. Inputs and perspectives from a party independent of the management would add further dimension beneficial to the Company’s overall planning and operations

6. APPROVAL REQUIRED

AirAsia does not require the approval of shareholders of AirAsia or any authorities to enter into the Agreement.

7. DIRECTORS' AND MAJOR SHAREHOLDERS' INTEREST

The Agreement is deemed a Related Party Transaction under the Listing Requirements of the Bursa Malaysia Securities Berhad. Mr. Conor McCarthy is a Non-Executive Director of the Company. Accordingly, Mr. McCarthy had abstained from approving the renewal of the Agreement by the Board of Directors of AirAsia.

8. STATEMENT FROM THE BOARD OF DIRECTORS

After considering all aspects of the Agreement, the Board of Directors of AirAsia is of the opinion that entering into the Agreement is in the best interests of the AirAsia Group.

9. OTHER MATTERS

All relevant documents relating to the Agreement are available for inspection during normal office hours at AirAsia's registered office at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan.

BY ORDER OF THE BOARD OF DIRECTORS OF AIRASIA
JASMINDAR KAUR
(Company Secretary)
(MAICSA 7002687)

This announcement is dated 10th September 2007.