We wish to announce that Malaysia Airports (Sepang) Sdn Bhd ("MASSB") has served AirAsia Berhad, our wholly-owned subsidiary ("AAB") with an unsealed copy of a Writ of Summons in the sum of RM9,395,856.50 pertaining to Passenger Service Charges ("PSC") that AAB has not collected, and refuses to collect, from travelling passengers. We shall defend these proceedings vigorously as we believe the claims are made without justification and are unreasonable.

By way of background, we have collected RM50 per non-ASEAN international passenger and have paid MASSB. However, MASSB wants us to collect another RM23 per passenger effective July 2018 which we have not and will not collect. MASSB insists that KLIA2 should charge the same rates as KLIA. We strongly believe, as does the Malaysian public, and have so represented to MASSB numerous times, that KLIA2 is a low-cost airport and the charges levied should reflect the level of services provided. We maintain that we are not obliged to collect the same PSC for passengers departing from KLIA2 and will not do so for the sake of all the stakeholders in the aviation and tourism industries.

We also intend to pursue cross claims against MASSB in relation to the infrastructure and state of the airports and its operations which include major apron defects, random closure of runways, damage to aircrafts and rupture of fuel pipelines. We believe these claims far exceed the claims MASSB is seeking. We have attempted – without success - on numerous occasions to engage MASSB on these issues but regrettably MASSB has decided to bring these issues to the public arena by commencing legal action.

AAB has instructed its solicitors to represent AAB in the proceedings and any further updates in respect of any material development will be made from time to time in compliance with the requirements of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

This announcement is dated 11 December 2018.