AirAsia upbeat about concluding Asia Aviation deal by this year

We are working on the details to have the best deal. Tan Sri Tony Fernandes

KUALA LUMPUR: AirAsia Bhd is not in a hurry to dispose of its leasing arm Asia Aviation Capital Ltd, which has been valued at US$1bil (RM4.46bil), but it is optimistic of concluding the deal by this year.

Group chief executive officer Tan Sri Tony Fernandes said: “We have maintained our position that we are going to sell it, but we do not want to be burdened with extra costs.”

“We are working on the details to have the best deal and we are confident that it will be done this year,” he told reporters on the sidelines of Invest Malaysia Kuala Lumpur 2017 yesterday.

In line with efforts to dispose of non-core assets, Fernandes said the group was looking into divesting non-core investments for high returns.

These assets include, among others, its 25% stake in AAE Travel Pte Ltd, a joint venture (JV) with Expedia Inc, and its 50% stake in the Asian Aviation Centre of Excellence – a JV with Canadian training simulator CAE Inc.

Asked on what kind of returns the group was looking to capture, Fernandes explained that in the past, it had gained a 20-time return on investment for its Expedia Investment. The low-cost carrier pared down its 50% stake in AAE to 25% in 2015 for RM306.2mil.

“There is no magic number. We don’t believe the market gives us value for holding those investments, so we might as well sell them and dividend them out.

“Nevertheless, we will keep relationships going,” he conceded.

Meanwhile, he said the listing of AirAsia’s affiliate airlines in the Philippines and Indonesia is expected to take place this year or by the first quarter of 2018.

With huge growth in terms of passenger services, he said the group intends to add 29 planes a year.

By 2021, he said AirAsia is targeting to grow its number of passengers to 100 million, up from 200,000 it had about 20 years ago.

Meanwhile, the group’s ancillary income is projected to be the next growth engine for the company, supported by its dynamic pricing system and duty free, and BigPay, AirAsia’s financial services company. Among other topics discussed during the closed-door session was AirAsia’s aim to be a growth stock in terms of profits and a dividend income stock.

Fernandes said the company had paid out dividends since 2013, averaging about 4% a year and it believed that it could give out special dividends every two or three years.