Skift Take

There's always some give-and-take whenever any customer places a big order for anything. But did Airbus go too far to try to sway AirAsia? And what will this mean for CEO Tony Fernandes' grand digital plans?

AirAsia Group CEO Tony Fernandes, one of the world’s most iconic airline entrepreneurs, will step aside from the company for at least two months after reports surfaced he and another top executive may have accepted a bribe from Airbus in exchange for major aircraft orders.

The news comes four days after Airbus entered into deferred prosecution agreements with regulators in the United States, the United Kingdom, and France over allegations the plane maker bribed its way into winning orders in many countries. In all, Airbus agreed last week to pay about $4 billion to settle many of the allegations.

Some of the juiciest allegations in the investigation involve AirAsia Group, which Fernandes and business partner Kamarudin Meranun bought in 2001. The duo has been fantastically successful, turning what was once a fledgling airline into a regional powerhouse.

According to prosecutors in the United Kingdom, two executives — thought to be Fernandes and Meranun, now the company’s chairman — accepted money from Airbus to sponsor a sports team they owned.

In a statement, Air Asia acknowledged the agreement but denied the sponsorship was linked to any aircraft order.

“The involvement of Airbus in the sponsorship of the sports team was a well-known and widely publicized matter bringing branding and other benefits to Airbus,” the statement said. It continued, “AirAsia vigorously rejects and denies any and all allegations of wrongdoing.

Malaysia Investigation

The Securities Commission Malaysia said in a statement that it will examine the allegations and review all available evidence to determine if there is any breach of securities laws. Under s317A of the Capital Markets & Services Act 2007, a director of a public listed company who does anything with the intention of causing wrongful loss to the company or its related corporation commits an offense which is punishable with imprisonment and fine.

As of 3 p.m. Monday in New York, Feb. 3, AirAsia Group stock took a 10.49 percent dip.

The bribery allegations against AirAsia could not come at a worst time as airlines in the region grapple with the coronavirus outbreak in Asia. Travel demand to China has taken a massive hit amid the raft of travel restrictions imposed on travelers from China. The Malaysia-based airline has canceled all flights in and out of Wuhan and has suspended some services to and from mainland China until February 29.

And with AirAsia’s head honcho embroiled in this latest scandal, it looks like the airline’s digital transformation plans will be taking a backseat for now.

UPDATE: This story was updated to include the additional comment of the Securities Commission Malaysia on AirAsia Group and the airline’s stock information.  

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Tags: air asia, airbus, tony fernandes

Photo credit: Air Asia Group CEO Tony Fernandes is stepping down, temporarily, as leader of the company. Air Asia Group

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