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AirAsia co-founders to take more control of budget carrier to cut costs

The logo of Malaysia's low-cost airline AirAsia Berhad is pictured on a structure as its staff undergo training at its academy in Sepang out
The logo of Malaysia's low-cost airline AirAsia Berhad is pictured on a structure as its staff undergo training at its academy in Sepang out

By Niluksi Koswanage

KUALA LUMPUR (Reuters) - The co-founders of Malaysia's AirAsia Bhd said on Wednesday they will take more control of running Asia's largest budget carrier by passenger volume and push on with cutting costs that have been a drag on profit.

Tony Fernandes and Kamarudin Meranun, who started up AirAsia in 1993, had shifted their base to Indonesia and set up a regional office to focus on spearheading the company's expansion in Southeast Asia and further afield.

They will mow move the regional office and merge its functions with Kuala Lumpur-listed AirAsia's head office to "simplify operations" in a company where net profit has tumbled 62 percent in the second quarter ended June.

"Kamarudin and I will be more involved in the operations of AirAsia Bhd as we continue our growth in the region and we will continue to focus on reducing costs," Fernandes said in a company statement.

"AirAsia has been on a cost-reduction drive, which has seen good success in the third quarter and will continue in the fourth quarter," he added.

AirAsia will report third quarter earnings on the week of Nov 18.

NEW ROLES

Fernandes will be re-designated as AirAsia Group CEO and will be tasked with driving brand value, cutting costs and driving efficiencies of AirAsia and its affiliates in Thailand, Indonesia, Philippines and soon to be India.

Kamarudin will take on the role as executive chairman and engage with the government and aviation regulators in Malaysia, the company said in the statement.

This includes working with Malaysia Airports Bhd , which has been tasked with setting up a new terminal for low-cost airlines that has been delayed four times since work began in 2010 and costs have risen to 4 billion ringgit ($1.26 billion) from 3.1 billion ringgit.

Set to be the world's largest terminal for budget carriers, Kuala Lumpur International Airport 2 (KLIA2) plans to serve 45 million passengers a year.

"Low-cost always wins and one of the most important parts of my new role will be to reduce costs at airports and to emphasize to the government that any cost increases will be detrimental to the Malaysian economy," Kamarudin said.

Current AirAsia CEO Aireen Omar will report to Kamarudin on regulatory and stakeholder management and to Fernandes on operational performance matters, the statement said.

AirAsia shares ended up 0.4 percent, outperforming the broader market <.KLSE> that slipped 0.2 percent.

($1 = 3.1740 Malaysian ringgit)

(Reporting by Niluksi Koswanage; editing by David Evans)

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