AirAsia to sell leasing arm early to cut debt

kuala lumpur — AirAsia expects to sell its aircraft-leasing unit as early as December as the largest customer for Airbus Group’s single-aisle jets aims to net as much as $1 billion from the transaction and pare debt.

Proceeds from the sale may be used to reduce debt or pay a dividend, Group Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview with Yvonne Man on Tuesday. AirAsia’s board approved the sale process for all or a substantial part of the unit, established in 2014 as Asia Aviation Capital Ltd, the carrier said in a filing on Monday.

“Depending on who’s the buyer, and there seems to be tremendous interest, we’ll likely divest all or maybe keep a minority interest for a period and sell out,” Fernandes said.

The divestment may help bolster the financials of the company, which had a total debt of 10.7 billion ringgit ($2.6 billion) at the end of June. Southeast Asia’s biggest discount carrier reported a 41 per cent jump in net income for the quarter through June, benefiting from lower fuel costs and a 10 per cent increase in passenger volumes in Malaysia.

The company named RHB Investment Bank, Credit Suisse Group and BNP Paribas as joint advisers for the transaction. The airline has received an offer valued at about $1 billion for the aircraft-leasing business, Fernandes said in May.

Strong traveller’s demand in Southeast Asia and a bullish outlook in India means AirAsia will be ‘surprisingly short’ of aircraft and may turn to the leasing market, Fernandes said on Tuesday.

Shares of the carrier rose for a third day after the company said late on Monday that net income rose to 342.1 million ringgit last quarter from 243 million ringgit a year earlier. The stock was last traded at 3.03 ringgit before the mid-day break in Kuala Lumpur. — Bloomberg

jump in net income in second quarter

40%