Expedia increases stake in AirAsia joint venture

AirAsia formed its JV with Expedia in 2011 (photo by Gil C)
AirAsia formed its JV with Expedia in 2011 (photo by Gil C)

Expedia will increase its stake in its joint venture with AirAsia to 75%.

The companies confirmed today that Expedia has agreed to acquire an extra 25% interest in AAE Travel Pte Ltd for US$86.3 million in cash.

The two companies formed AAE Travel in 2011 as a 50-50 joint venture. The initiative was aimed at expanding AirAsia’s sales reach by providing Expedia with exclusive distribution rights for the low-cost carrier group, which at the time only sold its flights direct.

The increase in Expedia’s stake in the venture comes at a time when the online travel company is growing rapidly. Following the acquisition of Wotif Group for US$612m late last year, 2015 has already seen Expedia purchase Travelocity for US$280m and enter into an agreement for the acquisition of Orbitz, in a deal worth approximately US$1.3 billion.

AirAsia started selling its fares via the GDS last year, and the group’s CEO, Tony Fernandes, said his company’s divestment in AAE Travel would “allow for the AirAsia group to further develop and diversify its distribution network”.

“We look to further maximise sales opportunities as we make our inventory available across multiple sales channels and geographies,” he said.

“Identifying and working with the best partners allows us to continuously offer innovative products and solutions to our guests, further solidifying our position as market leaders.”

Expedia experienced a 71% surge in net profits in 2014, on a 21% rise in revenue. AirAsia hasn’t yet released its full-year financial results for 2014, but its net profit slumped 54% in 2013.

The AAE Travel transaction is expected to close in the first half of 2015.

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