Air Asia Berhad Case Study

Table of Contents

1. Introduction of the selected companies 1

1.1 AirAsia Berhad (284669-W) 1

1.2 Apex Healthcare Berhad (473108-T) 2

1.3 MHC Plantations Bhd (4060-V) 2

2. Different Types of Dividend Policies 3

2.1 Constant Payout Ratio Policy 3

2.2 Constant Nominal Dividends 3

2.3 Special Dividends Payout Policy 4

2.4 Policy of No immediate Dividend 4

2.5 Regular Stock Dividend Policy 4

3. Analysis of firms’ dividend policies. 4

4. Comparison of firms’ dividend policies 6

5. Conclusion 7

1. Introduction of the selected companies

1.1 AirAsia Berhad (284669-W)

AirAsia is a company operates in transportation and service industry and is one of the leading low-fare airlines in the world. The company was first established in 1993 by conglomerate of Malaysian government, DRB-Hicom and started operations on 18th November 1996 (Wikipedia, 2012). However the company wasn’t successful and went into huge amounts of debts, which the company was not able to pay. In 2001, Tune Air Sdn Bhd bought the indebted airline with just only RM1 (USD 25 cents) (AirAsia, 2010) with its existing debts of RM 40 million (Wikipedia, 2012).

The vision of the company is “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares” (Profile, 2012), and the mission of the company is, to be the best company to work for, to be a globally recognized ASEAN brand, attain the lowest cost with maintaining the highest quality product (Profile, 2012). Company is driven by six key values in order to reduce the cost and maintain low fares. These six key values are safety first, high Aircraft Utilization, Low Fare - No Frills, Streamline Operations, Lean Distribution System and Point to Point Network (Profile, 2012).

The company was rebranded and began operations short after the takeover with just two ageing aircrafts, and made profit in 2002 with a catchy slogan of “now everyone can fly”. The man behind this land mark achievement is Dato’ Sri Dr Tony Fernandes. Since the beginning of the operation, company secured some of the most valuable awards of the industry, such as Best-Low cost Airline Award by Skytrax World Airline Awards in consecutive three years, 2011, 2010 and 2009 (AirAsia, 2012) and Airline of the Year Award from CAPA Aviation Awards for Excellence in