AirAsia to Sell 120 Aircraft on a Sale-and-Lease

10th Jul 2015

Largest low budget airline in Malaysia and the region AirAsia confirmed on Friday it will sell up to 120 aircraft from its fleet. The carrier has made this decision as a part of its ongoing plan to cut debt.

The planes will be sold on a sale-and-lease method.        

Speaking to Today Online, AirAsia Chief Executive Officer and President Tony Fernandes said:

The plan would not affect capacity expansion through the development of new routes and rationalizing the existing network. Investors haven’t really given us credit for the fact that we in fact own everything and that we have 2 $USD billion cash pile. We are profitable in Malaysia and Thailand, Indonesia is breaking even and the Philippines will break even in the fourth quarter of this year.

Fernandes further continued:

We are not in this for the short-term. It took us five years to break even in Thailand and there’s no way that we will give up Indonesia. The country has such tourism potential.

If You Think AirAsia Will Quit Indonesia You are Living in Cuckoo Land, Says Fernandes

According to Fernandes, anyone who thinks his company will leave Indonesia is living in a cuckoo land.

Fernandes hopes the investors will look at the company with different eyes after the 10-year plan is fully implemented. This, he believes, will lead to higher market capitalization and a better position in the industry for AirAsia.

The planes will be sold in a 10-year period and the whole deal should net around $2 billion for AirAsia.20 Aircraft will be sold this year.

AA's CEO explained how this should work:

This would bring down the airline’s gearing two times by the end of the year from 2.47 times. This would go hand-in-hand with raising fresh funds and brining in new strategic investors. At least $50 million in new equity will come in and we will match it.