He bought an airline for 26 cents

He bought an airline for 26 cents. Three days later, 9/11 happened.

On 8 September 2001, Tony Fernandes and his partner Kamarudin Meranun signed an agreement with the Malaysian conglomerate DRB-Hicom for 99.25% of a failing airline called AirAsia.

The price was 1 ringgit. About 26 US cents.

What came attached to it: two Boeing 737-300s, 250 employees, and 40 million ringgit of debt, roughly $11 million.

Fernandes had left his job as regional vice president at Warner Music South East Asia two months earlier. He had an accounting degree from the London School of Economics and had once audited books at Virgin Atlantic.

He had never run an airline.

To fund the deal he mortgaged his house and emptied his savings.
Then, on 11 September, three days after he signed, aircraft flew into the World Trade Center and global aviation collapsed.

Every instinct says he was finished before he had started.

The opposite happened.

With the industry in freefall, aircraft lease prices fell to record lows. The planes Fernandes needed in order to grow suddenly cost a fraction of what they would have in a healthy market.

At the same time, passengers who could no longer justify a full-fare ticket began hunting for the cheapest seat available. He was building the airline that sold exactly that.

Within two years AirAsia had broken even and cleared the debt. Its 2004 listing was oversubscribed by 130%.

Now the part that 26 cents hides.

He did not buy a company for pocket change. He bought $11 million of someone else's debt and put his own home behind it, in the week his industry looked finished.

The 26 cents was the headline. The real price was everything he owned.

Cheap entry is never the same as free entry. What made this work was not the token price. It was that he was willing to stake his house on a conviction while the world had stopped flying.

The best moment to enter an industry is usually when the people already inside it are trying to leave.

You just need something real to put behind the conviction.

What would you buy today, in the market everyone else is running from?

Harsh

I build businesses with extraordinary people. I share my learnings daily on my WhatsApp Community and LinkedIn, and weekly on this Sunday Email.