AirAsia Bhd, the Asia-Pacific region’s biggest budget airline, is likely to use most of the proceeds from a proposed sale of its aircraft leasing arm to pay a dividend, AirAsia Group CEO Tony Fernandessaid in an interview.
The airline expects to get binding bids for the unit by March and close the deal by summer, 52-year-old Fernandes said in a Bloomberg Television interview with Francine Lacqua in Davos, Switzerland, while attending the World Economic Forum.
The Sepang, Malaysia-based carrier’s board is to make the final call on whether to use the proceeds to pare debt or pay a dividend, he said.
“Our gearing is very low anyway, but I always like to have more cash than less cash,” Fernandes said. “It’s really up to the board to finally decide what to do with that”
The divestment of Asia Aviation Capital Ltd might help bolster the financials of the carrier, which has ordered hundreds of jets from Airbus Group SE and had a net debt of 8.8 billion ringgit (US$1.98 billion at the current exchange rate) at the end of September last year.
A dividend might also cheer investors who were rewarded with a 78 percent rally in the shares last year, the best in six years.
The asset had received an offer valued at about US$1 billion, Fernandes said in May last year.
Established in 2014, Asia Aviation Capital had a fleet of 59 airplanes at the end of September, leased primarily to the parent’s affiliates. The unit is to receive an additional 100 Airbus A320 and some A321neo aircraift that were ordered last year.
Asia Aviation Capital manages aircraft leased to other affiliates outside of Malaysia, including Thai AirAsia Co, PT Indonesia AirAsia and AirAsia India Pvt, according to filings in 2014.
RHB Investment Bank Bhd, Credit Suisse Group AG and BNP Paribas SA are joint advisers to the sale.
“Some people have come in at the last minute,” Fernandes said, referring to bidders.
“We’re working with Credit Suisse and the banks to see if they can still make the timeline,” he added, declining to disclose names.
As airlines serving the Asia-Pacific region move to triple their fleet, they have been finding that it can be cheaper to lease jets instead of buying them from Boeing Co or Airbus.
The relative safety of the leasing business, compared with that of an airline, has prompted conglomerates led by Hong Kong billionaires Li Ka-shing (李嘉誠) and Cheng Yu-tung (鄭裕彤) to enter the industry.
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