AirAsia clears the air on privatisation

The low-cost carrier said its major shareholders were looking at "strategic options" on investments but had not reached any decision yet.

"As is normally expected with other investors, the major shareholders of the company evaluate all strategic options with regard to its various investments from time to time and the major shareholders get approached by several parties from time to time with various proposals, including to explore the possibility of increasing their stake in the company," AirAsia said.

"However, the major shareholders have not reached any decision at this stage as there are many factors to carefully consider and this may or may not lead to any transaction," the budget carrier told Bursa Malaysia.

Shares in AirAsia hit a low of 78 sen in late August after it came under attack from a Hong Kong-based equities research firm, GMT Research, that questioned its financial accounts and claimed that its business model was not sustainable.

The other issue bogging down the airline was the US-dollar-denominated loans that grew because of the weakening ringgit.

But the shares have picked up steadily over the past month on speculation that the company could be taken private because of its cheap valuation.

Last week, a news wire reported that the major shareholders of AirAsia – Tony Fernandes and his long-time business partner Kamarudin Meranun – had gone to Singapore to meet with bankers when the share price was at its low with the view of taking the airline private in a management-led buyout.

Fernandes is chief executive officer while Kamarudin is chairman of AirAsia, and they hold 19 per cent of the company.

Maybank Investment Bank has said in a report that the cost of privatising AirAsia is estimated at 2.84 billion ringgit (Bt23.5 billion) for the remaining 81 per cent.

The board of AirAsia said this week that it had not received any offers to take the company private and would make the appropriate announcement should there be any further official development on this matter.

The article by a foreign news wire also said AirAsia had been in talks with lessors, which include cash-rich Chinese companies, to sell a stake in its leasing subsidiary.

AirAsia said it had over the years received inquiries from aircraft-leasing companies from all over the world for a stake in its wholly owned subsidiary Asia Aviation Capital Ltd (AACL).

"These are parties who are interested in acquiring aircraft to expand their existing portfolio.

"And since the incorporation of AACL, we have been approached by investors who are keen on co-investing in the subsidiary as an indirect means of owning the aircraft in our fleet.

"As part of our corporate disclosure policy, we will also make the appropriate announcements to Bursa as and when there are material developments or change in circumstances in AACL," it said.

This hasn’t been AirAsia’s greatest year. Its stock price took a beating from its peak of 2.60 ringgit to a low of 78 sen in late August, after GMT Research’s concerns.

AirAsia has made some adjustments after the GMT report emerged and its stock price has recovered, making it a less attractive privatisation target.