1.

0 Background

AirAsia began operations on November 18, 1996, following its establishment in 1994. Tune
Air Sdn Bhd, Tony Fernandez's company, bought the airline from DRB-Hicom in 2001. The
Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport is AirAsia's first
and main hub. In July 2020, AirAsia triggered the PN17 suspension criteria while PN17
indicated that the company was experiencing financial distress. Although AirAsia only
triggered Bursa Malaysia's PN 17 criteria in 2020 ， but AirAsia's financial status has been
harmed for the past two years. AIRASIA needs to raise up to RM 7.4 billion to get out of
PN17 and to resolve the company's financial difficulties. The reason for the merger and
acquisition of AirAsia was revenue synergies. Revenue synergies are the ability of the
combined company to generate more sales than the two companies could generate
individually. The merger of two airlines can capture a large portion of the market and thus
generate more sales. In addition to this, the merger and acquisition of AirAsia will allow
MAS to achieve greater economies of scale. This is because when the two companies are
combined into one, they are more resourceful and stronger. The newly created firm will have
access to more qualified personnel, which will aid in the expansion of its operations. Another
reason is cost synergies can help the MAS to reduce the operation cost. The operating cost
savings from the merging of two companies are known as cost synergies. Cost synergies are
cost reductions due to increased efficiency of the combined company which means that the
combined company can do more than the two companies could do alone. After MAS mergers
and acquisition AIRASIA, MAS might reduce cost about airplane, airline and proprietary
technology like AIRASIA APP and SUPERAPP. When MAS acquired AirAsia MAS was
able to acquire AirAsia's assets such as aircraft and routes which meant lower costs for MAS
as it acquired AirAsia's aircraft and routes. At the same time, MAS gets access to AirAsia's
proprietary technology such as the AirAsia app because AirAsia's app is a little bit inferior
compared to MAS's app, and the acquisition of AirAsia will improve MAS's app to attract
more customers. Moreover, MAS is national airlines that got fund from Malaysia
government. MAS got fund RM3.6 billon during the pandemic COVID-19 from Khazanah
Nasional Berhad, to cover the company’s costs throughout the restructuring period until
2025. Even though, AirAsia represent for Malaysia flag but no doubt there is flag
discrimination compared to what MAS get. By merge with MAS, AirAsia will get a benefit
such as the fund from government specially to cover up the loss due to pandemic COVID-19.