ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Nikkei Markets

AirAsia Group gets 13 potential offers for aircraft assets

No firm deal signed yet; analysts flag risks of lower leasing income

Further disposal of aircraft however could erode AirAsia’s negotiating power with plane manufacturers in future purchases, said an analyst.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysian budget carrier AirAsia Group said Thursday it has received more than a dozen expressions of interest for the acquisition of some of its aircraft, but no firm deal has been signed yet.

The 13 prospective buyers include U.S. private investment firm Castlelake L.P., AirAsia Group said in an exchange filing. However, no legally-binding contract for the sale has been signed by any of the parties, the airline said. The company didn't elaborate.

Analysts said the move is in line with AirAsia's strategy to keep its total assets light but flagged risks of loss of leasing income from the aircraft disposed and higher expenses with a sales-and-leaseback arrangement.

"We view this move positively as a means to remove residual risks of the aircraft in its book," Nomura Securities Analysts Ahmad Maghfur Usman and Divya Thomas wrote in a note to clients. A sale could also point towards a special dividend pay-out, they said.

The company's statement comes after Reuters, quoting sources, reported that Castlelake has struck a deal to buy about 30 narrowbody planes from AirAsia Group in a deal potentially worth about $800 million.

If successful, the sale would mark another round of asset disposal after the company completed a sale-and-leaseback deal involving 84 aircraft and 14 engines worth nearly $1.2 billion. AirAsia Group has also disposed its 25% stake in travel portal Expedia Group for $60 million earlier this year.

Further disposal of aircraft however could erode AirAsia's negotiating power with plane manufacturers in future purchases, said Hong Leong Investment Bank's Analyst Daniel Wong.

"Airplane manufacturers might as well sell it to the lessor if AirAsia Group is not planning to hold assets," he said. "Ideally, it would be good to keep a 50-50 or 60-40 ratio between leasing and self-own (assets)," he said.

Shares of AirAsia Group rose 4.7% to close at 2.66 ringgit, while the benchmark FTSE Bursa Malaysia KLCI ended 0.8% higher.

--Gho Chee Yuan

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media