Agenda Daily

AirAsia to get binding bids for leasing unit by March

AirAsia Bhd., Southeast Asia’s biggest discount carrier, expects to get binding bids for its aircraft-leasing unit by March, Group Chief Executive Officer Tony Fernandes said.

The airline expects to close the deal by summer and the board will decide whether to use the proceeds to pare debt or pay a dividend, Fernandes said in a Bloomberg Television interview with Francine Lacqua in Davos, Switzerland, while attending the World Economic Forum. A large part of the proceeds is likely to be used for a dividend payment, he said.

“Our gearing is very low anyway but I always like to have more cash than less cash,” Fernandes said. “But it’s really up to the board to finally decide what to do with that.”

The divestment of Asia Aviation Capital Ltd. may help bolster the financials of the carrier that has ordered hundreds of jets from Airbus SE and had a net debt of RM8.8 billion at the end of September. A dividend may also cheer investors who were rewarded with a 78% rally in the shares in 2016, the best in six years. The asset had received an offer valued at about US$1 billion, Fernandes had said in May.

Established in 2014, Asia Aviation Capital had a fleet of 59 planes as of end-September, leased primarily to the parent’s affiliates. The unit will receive an additional 100 Airbus aircraft and get 30% of a similar number of A321neo aircraft that AirAsia ordered last year.

Asia Aviation Capital manages aircraft leased to affiliates outside Malaysia, including Thai AirAsia Co., PT Indonesia AirAsia and AirAsia India Pvt., according to filings in 2014. RHB Investment Bank Bhd., Credit Suisse Group AG and BNP Paribas SA are joint advisers to the sale.

“Some people have come in at the last minute,” Fernandes said, referring to bidders. “We’re working with Credit Suisse and the banks to see if they can still make the timeline,” he said, declining to reveal names.

AirAsia shares rose 3.8% on Tuesday in Kuala Lumpur to RM2.46, extending their gains this month to 7.4%, according to data compiled by Bloomberg.-18/1/2017

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