KUALA LUMPUR: AirAsia Bhd is selling its aircraft leasing operator unit, Asia Aviation Capital Ltd, for US$1.18 billion (RM4.63 billion) to commercial aircraft investments manager BBAM Ltd Partnership (BBAM).
In an exchange filing today, the low-cost carrier said the divestment would allow the company to raise about US$902 million (RM3.52 billion) of proceeds to repay bank borrowings.
“The repayment of existing financing is expected to result in interest savings of about RM22.2 million per annum,” it added.
Under the terms of the agreements, FLY Leasing Ltd (FLY), Incline B Aviation Ltd Partnership (Incline) and Nomura Babcock and Brown (NBB) will acquire a portfolio of 84 aircraft and 14 engines, of which 79 aircraft and 14 engines will be leased back to AirAsia and its affiliates.
FLY and Incline have also entered into agreements to buy 48 aircraft to be delivered to AirAsia and an option to buy a further 50 aircraft.
AirAsia group chief executive officer Tan Sri Tony Fernandes said the sale is much in line with the airline’s strategy of disposing its non-core assets and businesses executed over the last six months.
“This includes our training centre, ground handling unit and now our leasing unit – and unveiling the true value of AirAsia,” he said in a statement today.
Fernandes said the airline’s gearing was high and some people could not see the rationale of owning those (airplane) assets.
“This deal shows it was the right strategy as we have something of value to dispose in return for cash and an equity relationship in two great companies, while removing residual risks,” he added.
He pointed out the disposal is a perfect outcome to a strategy when it started in 2004.
“I’m thrilled at the execution of our long-term vision. We have now disposed of most of our physical non-core assets and we are thrilled to be embarking on our new digital strategy which will build a very valuable group of assets,” he said.
BBAM chief executive officer Steve Zissis said the company is fortunate to having the opportunity to build a long-term partnership with AirAsia.
“Fernandes and his team have built an incredible business at AirAsia,” he added.
AirAsia said it will receive non-cash considerations comprising US$50 million (RM196.38 million) in FLY American Depositary Shares (ADSs), resulting in AirAsia owning about 10.2 per cent of FLY.
AirAsia said it will also commit US$50 million (RM196.38 million) into Incline Parallel Funds, which will invest alongside the Incline Aviation Master Fund in global aviation investments.
AirAsia’s share trading on Bursa Malaysia was suspended from 9.00am today and will resume from 2.30pm.