AirAsia Gets an Offer for its Leasing Company

31st May 2016

With many airline companies figuring out that it would be much cheaper for them to rent a plane, instead of buying it from either Boeing or Airbus, some have apparently decided to go a step beyond with this.

According to the chief executive officer of the biggest budget carrier in Asia, AirAsia, Mr Tony Fernandes, his company has already received a lucrative offer to sell its aircraft leasing company – Asia Aviation Capital.

AirAsia Offered $1 Billion for Leasing Company

The offer, Fernandes said, is around 1 billion US dollars. However, he declined to further comment on this, only saying the offer will be discussed with the board.

Fernandes said:

We actually had an offer to buy it (Asia Aviation Capital) and I think this is a very powerful cash generator. At some point, we will divest in this asset.

He added:

It’s interesting that we haven’t even gone to the market and someone approached us for it, because obviously we have some very valuable assets in our A320s and a very strong order book.

Not long after AirAsia CEO divulged this information, AA shares went up to their highest point in over a year. AirAsia shares rose 0.4 per cent yesterday, after skyrocketing 4.2 per cent earlier in the day, to reach RM2.41 per share. This year, the airline’s shares have gone up 87 per cent in total, largely thanks to its surge in profits.

Analyists Say AirAsia is Doing Fine, Doesn’t Need to Sell the Leasing Company

Commenting on the possibility of AirAsia selling off its leasing company, an analyst for Malayan Banking, Mohshin Aziz said:

AirAsia doesn’t need to sell the leasing arm now, because its balance sheet is alright and it will get cash infusion from founding shareholders. As a business, you want to have many avenues and the leasing arm opens an avenue for AirAsia, should it need to raise cash.

AirAsia launched the leasing company two years ago, first leasing its single-aisle Airbus A320s to Pakistan International Airlines. Asia Aviation Capital only manages leases to affiliates outside Malaysia. These would be AirAsia India, Thai AirAsia, Thai AirAsia X, Indonesia AirAsia Indonesia AirAsia X, AirAsia Japan and Philippines AirAsia.

Currently, AirAsia currently has a fleet of 171 A320 jets in its fleet. AirAsia X, the long-haul, low-cost carrier subsidiary of AA, has 29 A330s.