AirAsia: No timeline for monetising assets

SEPANG: AirAsia Bhd, which was offered US$1 billion (RM4.1 billion) for its aircraft leasing company, has not set a timeline for the disposal but will eventually monetise all its investment assets, said group CEO Tan Sri Tony Fernandes.
“Our assets are very valuable. I want to highlight that, today, we have AirAsia Expedia, we have this training centre here which is now delivering about RM100 million in profit, we have investments in Tune Insurance, we have investments in AirAsia X and we have a fantastic leasing company now,” he told reporters after its AGM yesterday.
He said the aircraft leasing company, named Asia Aviation Capital Ltd (AAC), has “great assets” and a “phenomenal” order book from Airbus for the A320neo, and a strong strategic relationship with another leasing company.
AAC made its first lease outside the group to Pakistan International Airlines recently, and expects to recruit a CEO in a month’s time.
Headquarted in Labuan, AAC is less than two years old. It owns and oversees aircraft leasing arrangements for its affiliate airlines such as Thai AirAsia and Indonesia AirAsia. It was reported that the company had 43 A320s as of March 2016.
“Many years people have been saying our gearing is high, but the management continues to buy planes. Now a lot of those planes are almost 12 years old so there’s no more debt, so there’s huge value in that,” said Fernandes.
He did not reveal the party that made the RM1 billion offer for AAC.
Fernandes said the sale would require board approval but it is the group’s intention to eventually dispose of its strategic investments.
“We’ll never hold AirAsia X forever, Tune Insurance. These are all great ways of generating cash. If you add the value of all those investments, it’s worth more than the airline right now.
“Of course, eventually, we will sell. It’s not our core business to be in training or to hold investments in insurance. These are purely strategic investments to generate cash. Our business is passenger service and ancillary, which includes cargo,” he added.
Fernandes said with a US$1.6 billion valuation for the group, the US$1 billion offer values the rest of the airline at US$600 million.
“You are valuing the rest of the airline at US$600 million which is crazy, with the earnings we do. So in time, people will see the true value of this company,” he said.
Meanwhile, Fernandes hopes to relaunch AirAsia Japan by October, marking its second attempt to operate a low-cost carrier in Japan.
“I was just in Nagoya ... it’s looking good. I’m really feeling good about AirAsia Japan. We’ve got a great team there,” he said.
In July 2014, it signed a shareholders agreement with Rakuten, Octave Japan Infrastructure Fund I GK, Noevir Holdings and Alpen to establish AirAsia Japan. The airline recently obtained its air operator’s certificate.