AirAsia Bhd, Asia’s biggest budget airline, will kick off the sale of its leasing unit this month, seeking to cut debt with a deal that could value the business at about US$1bil (RM4.04bil), people familiar with the matter told Reuters.
A successful deal would help group CEO Tan Sri Tony Fernandes, one of Asia’s best-known entrepreneurs, to bolster AirAsia’s finances and spur growth.
At an overall valuation of US$1bil, the sale would be significant for a carrier with a market value of US$2bil (RM2.08bil).
AirAsia is looking to sell a majority stake in the leasing unit, Asia Aviation Capital (AAC) but is also open to a full sale, sources said, adding that the final valuation could change depending on talks with potential buyers.
They said AirAsia was considering paying a special dividend from the proceeds. The people declined to be identified because the discussions were confidential. AirAsia declined to comment.
The carrier planned to tap potential suitors including the leasing units of China’s HNA Group, China Merchants Bank, and the aviation leasing company backed by Hong Kong billionaire Li Ka-shing for the sale, the people familiar with the matter said.
China Merchants Bank, HNA Group and Li’s Cheung Kong Infrastructure Holdings Ltd did not respond ’ requests for comments.
Fernandes, who built up AirAsia into multi-billion dollar business from a two-plane operation in 2002, is cashing in on a booming leasing sector after AirAsia ordered hundreds of Airbus planes at bargain prices in recent years and emerged as one of Airbus’ biggest customers.
AirAsia responded to a critical research report last year by Hong Kong-based GMT Research saying it stood by its accounts.
“This is a landmark transaction if Tony manages to pull it off,” said Shukor Yusof, founder of Malaysian aviation consultancy Endau Analytics, adding that AirAsia could use the funds to invest in its businesses in India, Indonesia and Japan.
Sources said AirAsia was expected to approach about a dozen suitors including infrastructure and pension funds to bid for the leasing company.
“Aircraft are good US-dollar denominated, cross-border assets to own,” said Shukor.
AirAsia has a fleet of some 170 jets operating across Thailand, the Philippines, India, Indonesia and Malaysia and competes with the likes of Indonesia’s Lion Group, Singapore Airlines, Qantas Airways, Malaysian Airlines and some of their budget affiliates.
Deal making is picking up in the US$228bil global plane leasing sector, with Asian lessors grabbing a bigger share, buoyed by the growth in China.
“This is a way to unlock the value of the aircraft orders while also managing AirAsia’s balance sheet,” said one person familiar with the matter.
In a regulatory filing in May, AirAsia said it had received preliminary interest for AAC.
AirAsia has hired Credit Suisse, BNP Paribas and RHB Bank to handle AAC’s sale and expected to complete it by early next year, the people familiar with the matter said.
BNP Paribas and RHB Bank declined to comment, while Credit Suisse did not respond to Reuters requests for comments.
Though AAC has only 55 planes, primarily leased to AirAsia affiliates outside Malaysia, it expects to get more aircraft from the airline and lease them to other airlines. — Reuters