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Nikkei Markets

INTERVIEW: AirAsia Aims To Complete Stake Sale In Plane Leasing Arm By Year-End-CEO

By Gho Chee Yuan
Nikkei Markets
KUALA LUMPUR (Jul 20) -- Malaysian budget carrier AirAsia aims to complete the stake sale process in its aircraft leasing arm Asia Aviation Capital by this year-end, its chief executive said.

AirAsia has appointed RHB Investment Bank, Credit Suisse, and BNP Paribas to advise on either a full or a part sale of a "substantial" stake in Asia Aviation Capital. If successful, proceeds from the sale could be distributed to shareholders as dividends or used to trim AirAsia's debt, the company had said.

"It is something we hoped to close very, very soon," Aireen Omar told Nikkei Markets. "I can safely say at least by end of the year."

Asia Aviation was established in September 2014 to provide and oversee aircraft leasing arrangements for AirAsia and its affiliates in Indonesia, Thailand and the Philippines. By the end of 2016, Asia Aviation had leased 63 aircraft to its associates as well as third-party airline, according to its annual report.

The planned sale comes at a time when air travel in Asia is booming, driven by robust economic growth that has created a rapidly-expanding middle class, many of whom are first-time fliers. Southeast Asia, in particular, could underpin demand for as many as 3,750 new planes over the next two decades, according to estimates by U.S. plane-maker Boeing.

AirAsia's load factor, a measure of how full planes are with passengers, will remain at around 90% this year driven by robust travel demand, Aireen said.

"It has been around 90% and we expect it to be high 80s or low 90s," she said. "This is an indication that would be flying more people with more frequency and connectivity."

AirAsia targets to increase its ancillary income to 60 ringgit per person in the "immediate future" from 50 ringgit as on first quarter this year, Aireen said. "Ancillary income could be more than 20% of the total group's revenue," she added.

This year, AirAsia's Malaysian operations will start flying up to six new routes to enhance its network and connectivity in the region, Aireen said, noting that about 70% of the new routes would be international.

AirAsia shares that have gained 44.1% year-to-date are currently trading 1.2% higher at 3.29 ringgit apiece.
- By Gho Chee Yuan; terence.gho@nikkeinewsrise.com; +603-20267363
- Edited By Abhrajit Gangopadhyay
- Send Feedback to feedback@NikkeiNewsRise.com
- Copyright (c) 2017 Nikkei NewsRise Asia Pte Ltd.

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