AirAsia Bhd expects to sell its aircraft-leasing unit as early as December as the largest customer for Airbus Group SE’s single-aisle jets aims to net as much as $1bn from the transaction and pare debt.
Proceeds from the sale may be used to reduce debt or pay a dividend, group chief executive officer Tony Fernandes said in a Bloomberg Television interview with Yvonne Man yesterday. AirAsia’s board approved the sale process for all or a substantial part of the unit, established in 2014 as Asia Aviation Capital, the carrier said in a filing on Monday.
“Depending on who’s the buyer, and there seems to be tremendous interest, we’ll likely divest all or maybe keep a minority interest for a period and sell out,” Fernandes said.
The divestment may help bolster the financials of the company, which had a total debt of 10.7bn ringgit ($2.6bn) at the end of June. Southeast Asia’s biggest discount carrier reported a 41% jump in net income for the quarter through June, benefiting from lower fuel costs and a 10% increase in passenger volumes in Malaysia.
The company named RHB Investment Bank Bhd, Credit Suisse Group and BNP Paribas as joint advisers for the transaction. The airline has received an offer valued at about $1bn for the aircraft-leasing business, Fernandes said in May. Strong traveller’s demand in Southeast Asia and a bullish outlook in India means AirAsia will be “surprisingly short” of aircraft and may turn to the leasing market, Fernandes said yesterday.
Shares of the carrier rose for a third day after the company said late Monday that net income rose to 342.1mn ringgit last quarter from 243mn ringgit a year earlier. The stock was last traded at 3.03 ringgit before the mid-day break in Kuala Lumpur. AirAsia agreed last month to buy 100 A321neos, adding to an order tally of 575 Airbus single-aisle aircraft, 172 of which are already in the fleet. AirAsia will start receiving the A321neos in 2019 and will take delivery of its first A320neos next month, Fernandes said.
An AirAsia plane on the tarmac at Kuala Lumpur International Airport. Southeast Asia’s biggest discount carrier reported a 41% jump in net income for the quarter through June, benefiting from lower fuel costs and a 10% increase in passenger volumes in Malaysia.
