Virgin Acquires Stake in AirAsia X

Richard Branson’s Virgin Group has become a 20% shareholder in new low cost carrier AirAsia X. AirAsia X, a new Malaysian airline that has ambitions to become the world's top long-haul budget carrier is the sister company of Air Asia which launched in 2001 and operates cheap flights throughout the Far East and to the UK and Europe.

AirAsia X, which was founded by former Virgin executive Tony Fernandes, have not disclosed a price for the deal, which is rumoured to be small, but the real value lies in its long-term alliance with the company which owns Virgin Holidays. AirAsia X Chairman Kalimullah Hassan said: "Virgin's involvement will provide AirAsia X with greater global credibility and visibility across its markets and will assist in the negotiations with various airports, regulatory authorities and governments,"

The low-cost flight concept has yet to be proven successful on a large scale in the long-haul market, where it is feared that passengers will be reluctant to sit for eight hours or more in a crowded aircraft with a no-frills service. The first services are due to be launched in September to Australia and China, followed by London and India.

The deal involves Virgin taking a fifth of the shares in Fly Asian Express, the holding company of the Kuala Lumpur-based airline and gives Sir Richard Branson's group a firm foothold in the Asian airline sector. Sir Richard Branson stated: "I am thrilled to be able to support them in this venture and look forward to seeing low cost, long haul travel being opened up from their base in Malaysia." airline Virgin Blue.