Contents :

1. Introduction

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  The Board of Directors of AirAsia ("Board") is pleased to announce that in connection with the rationalisation of domestic routes for air services in Malaysia ("Rationalisation"), AirAsia has on 2 August 2006 entered into a formal lease agreement ("Lease Agreement") with FAX to lease to FAX the following aircraft:
  · 5 DHC6 Twin Otter; and
  · 7 Fokker F50.
  

2. Details of the contracting parties

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  (a) FAX

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  • •  
      FAX, a company incorporated in Malaysia as a private limited company under the Companies Act, 1965, on 19 May 2006, has been set up with the intention to operate the new airline to provide rural air services in Sabah and Sarawak ("Interior Services"), previously known as the MAS Rural Air Services. The current shareholders of FAX are Anthony Francis Fernandes, Kamarudin bin Meranun and Raja Mohd Azmi Raja Razali.

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  •  
    •  
      AirAsia was incorporated in Malaysia as a private limited company under the Companies Act, 1965, on 20 December 1993. AirAsia provides low-cost air carrier services in Southeast Asia. The Company focuses on providing high-frequency services on short-haul, point-to-point domestic, and international routes.
      
  (b) AirAsia
  

3. Salient terms of the lease of the aircraft

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  The salient terms of the lease of the aircraft referred to in Section 1 above are as attached in Table 1.

4. Rationale for the Lease

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  The Lease would enable FAX to provide and undertake all flight operations in relation to the Interior Services, using turbo-prop aircraft. The Lease is in line with the memorandum of understanding between AirAsia and FAX executed on 31st July 2006 setting out the broad parameters governing the Interior Services for the duration of the MOU.
  

5. Directors’ and major shareholders’ interests

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  •  
    •  

      	Direct	Indirect
      	No. of Shares	%No. of Shares%
      Anthony Francis Fernandes	2,627,010	0.11880,683,247137.53
      Kamarudin bin Meranun	100,000	*880,683,247137.53

  Anthony Francis Fernandes and Kamarudin bin Meranun are directors and major shareholders of the Company. Hence, they are deemed interested in the Lease. They have abstained and will continue to abstain from all Board deliberations in respect of the Lease.
  
  The interested directors’ and interested major shareholders’ direct and indirect shareholdings in AirAsia as at 21 July 2006 are as set out in the table below.

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  Notes:
  
  * Negligible
  1. Deemed interested by virtue of Section 6A of the Companies Act, 1965, through a shareholding of more than 15% in Tune Air Sdn Bhd
  
  Save as disclosed above, no other directors and/or major shareholders of AirAsia and/or persons connected with them have any interest, whether directly or indirectly, in the Lease.
  

6. Effect on share capital, substantial shareholders’ shareholdings, earnings and consolidated net assets

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  The Lease will not have any effect on the share capital and substantial shareholders’ shareholdings of AirAsia.
  
  The Lease is not expected to have a material effect on the consolidated net assets of AirAsia and the consolidated earnings of AirAsia for the financial year ending 30 June 2007.
  
  

7. Directors’ opinion

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  Save for the above interested directors, the Board having considered all the relevant factors in respect of the Lease is of the opinion that the Lease is in the best interests of AirAsia.
  

8. Waiver

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  The aircraft are being onward leased from Penerbangan Malaysia Berhad to FAX with no economic benefit to AirAsia and accordingly AirAsia may seek a waiver from Bursa Securities to comply with certain requirements in the Listing Requirements of Bursa Securities in respect of the Lease.

9. Other matters

Document available for inspection

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  The Lease Agreement is available for inspection at the registered office of the Company at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia during normal business days from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement.
  
  

This announcement is dated 2 August 2006.
Table 1

Salient terms of the lease of the aircraft

	DHC6 Twin Otter	Fokker F50
Effective Date	1 August 2006	1 August 2006
Expiry of Lease	31 July 2011	31July 2009
Date of Aircraft Manufacture	1970(1), 1983(2), 1988 (1), 1989 (1)	All aircraft: 1989
Delivery Date	1August 2006	1August 2006
No. of Aircraft	5	7

Announcement Info