Fernandes: Selling our aircraft monetises all our aircraft at high prices and avoids residual risk. — Bloomberg
PETALING JAYA: AirAsia Group Bhd, which is disposing of 25 aircraft to US-based global private investment firm Castlelake LP, intends to use the proceeds of the sale to ramp up its digital business and reward shareholders.
AirAsia Group chief executive officer Tan Sri Tony Fernandes said the disposal would provide the low-cost carrier with more cash at its disposal.
“Selling our aircraft monetises all our aircraft at high prices and avoids residual risk and allows us to return cash to shareholders and invest in our new digital business,” he said via Twitter following the company’s EGM yesterday.
On Dec 24, 2018, AirAsia announced that it was disposing of 25 aircraft to Castlelake LP in a deal worth US$768mil (RM3.22bil).
Castlelake LP will also purchase four new aircraft that will be delivered to AirAsia in 2019. The 29 planes – Airbus’ A320-200ceo and A320neo – will be leased back to AirAsia.
Later that month, AirAsia’s indirect wholly-owned subsidiary, Asia Aviation Capital Ltd (AACL), entered into a share purchase agreement with Castlelake’s indirect entities for the disposal of its entire equity interest in Merah Aviation Asset Holding Ltd – which owns the aircraft.
The proposed disposal is expected to reduce AirAsia’s gross gearing ratio from 0.53 times to 0.24 times.
Separately, Fernandes said the impact of the MFRS 16 accounting standard on AirAsia is “not very material.”
“Even with that standard and if you use profit and loss for analysis, the impact of the new standard MFRS 16 is about RM35mil a year,” he said via Twitter.
The MFRS 16 is a new accounting standard for leases that took effect this year.
CGSCIMB in a report earlier this month said the new accounting standard would result in higher gearing levels for AirAsia.
The research house noted that AirAsia had sold 79 aircraft to lessor BBAM Ltd Partnership in 2018 and is expected to sell a further 25 planes to lessor Castlelake LP by the third quarter of this year.
Together with the other existing operating lease aircraft, CGSCIMB said AirAsia is expected to capitalise RM11.8bil worth of borrowings related to the operating leases in 2019, effectively bringing back to the balance sheet what had previously been off-balance sheet.
“The impact would be to raise reported gross gearing of 19% in 2018 to 198% on a pro forma basis after MFRS 16.
“The overall impact to profit and loss earnings from the above sale and leasebacks is negative because AirAsia would have to pay for the lessors’ profit margin as well as provide for a higher level of maintenance charges based on lessors’ conditions for lease returns, which tend to be strict.
“The net result would be a squeeze on AirAsia’s profit margins.”
Meanwhile, AllianceDBS Research said AirAsia’s outlook remains steady as market leader in the industry with 41.7% market share.
“Expansion plans are under way with 18 new aircraft for 2019. Available seat kilometres (ASK) is expected to grow at 9.8% and revenue passenger kilometres at 10.1% backed by load factors of 84.7%. Subdued fuel prices would help support earnings,” it said.
“Selling our aircraft monetises all our aircraft at high prices and avoids residual risk and allows us to return cash to shareholders and invest in our new digital business,” he said via Twitter following the company’s EGM yesterday.
On Dec 24, 2018, AirAsia announced that it was disposing of 25 aircraft to Castlelake LP in a deal worth US$768mil (RM3.22bil).
Castlelake LP will also purchase four new aircraft that will be delivered to AirAsia in 2019. The 29 planes – Airbus’ A320-200ceo and A320neo – will be leased back to AirAsia.
Later that month, AirAsia’s indirect wholly-owned subsidiary, Asia Aviation Capital Ltd (AACL), entered into a share purchase agreement with Castlelake’s indirect entities for the disposal of its entire equity interest in Merah Aviation Asset Holding Ltd – which owns the aircraft.
The proposed disposal is expected to reduce AirAsia’s gross gearing ratio from 0.53 times to 0.24 times.
Separately, Fernandes said the impact of the MFRS 16 accounting standard on AirAsia is “not very material.”
“Even with that standard and if you use profit and loss for analysis, the impact of the new standard MFRS 16 is about RM35mil a year,” he said via Twitter.
The MFRS 16 is a new accounting standard for leases that took effect this year.
CGSCIMB in a report earlier this month said the new accounting standard would result in higher gearing levels for AirAsia.
The research house noted that AirAsia had sold 79 aircraft to lessor BBAM Ltd Partnership in 2018 and is expected to sell a further 25 planes to lessor Castlelake LP by the third quarter of this year.
Airasia smart, airasia gonna be asia's airline uber soon. Those that bad mouth myeg last time wanna collect cheap. Syndicate in the working. This time if airasia kena bad mouth, its time to collect~
Unlike some people, I have lots of counters. I have AA. I have Johotin, been adding too. I have others. Just because I said it's worth buying Johotin doesn't mean that I don't have AA anymore.
Again, what a retard. Unlike some people, most proper investors don't put all eggs in one basket.
People are accusing me of being a part of a syndicate or an investment banker. Bullocks.
I'm giving you facts. And reported news that are published for everyone to read. How am I, a tiny little ant, capable of controlling the market? Come on. What logic is that from such lowly people here?
Be rationale. And read the news. Don't read selectively. Don't read only good news to syok sendiri. Read everything and make your investment decision wisely.
sd jz adjust further aa price now. if u buy higher price today. sd wll further down d rpice again. aa price likely gain if Q1 result really appreciated frm what tf said.
Don't dare answer? Hello? I'm not in front of my phone or pc all day long unlike you.
Just say it. 1.3 is fine. I'm so okay with it. It's a public space. It's your opinion. Nothing wrong.
Just say all you want. And I can say all I want. We are not a communist country where people cannot simply say what they want, even in the cyberspace. Grow up.
Topkek counter and topkek investors on this section. AA RELEASED a statement about the sale of their aircrafts and all buggers here were screaming that the prices would go up and now speculating for a 20sen dividend, really delusional investors
Air_Asia, I am more curious about Jaya, each counter that the fellow enters sure would drop one. His now active in MBB and MBB is dropping, the guy brings bad luck to all counters
secure for Airasia in India now.... Tata holds more than 50% of Airasia India :)
Tatas raise stake in AirAsia India to 51% This is the first time since the airline’s inception in 2014 that Tata group has become the largest shareholder. By Mohit Bhalla, Mihir Mishra Read more at: //economictimes.indiatimes.com/articleshow/68930760.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
India is such a big country, if secured with Tata as the largest shareholders of Airasia India, the future for Airasia in India is very bright :)
Tatas raise stake in AirAsia India to 51% This is the first time since the airline’s inception in 2014 that Tata group has become the largest shareholder. By Mohit Bhalla, Mihir Mishra Read more at: //economictimes.indiatimes.com/articleshow/68930760.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Tatas will help to boost Airasia in India for sure...... very + for Airasia India hahaha
Tatas raise stake in AirAsia India to 51% This is the first time since the airline’s inception in 2014 that Tata group has become the largest shareholder. By Mohit Bhalla, Mihir Mishra Read more at: //economictimes.indiatimes.com/articleshow/68930760.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
India is such a big country with 1billion+ population.... better grab some shares fast fast hahaha
Tatas raise stake in AirAsia India to 51% This is the first time since the airline’s inception in 2014 that Tata group has become the largest shareholder. By Mohit Bhalla, Mihir Mishra Read more at: //economictimes.indiatimes.com/articleshow/68930760.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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New IPO: An enterprise IT solutions provider that provides implementation services, maintenance, support and professional services, Vetece Holdings Bhd aims to list on the Ace Market!
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New IPO: A manufacturing and trading of biomass fuel products, particularly PKS and wood pellets company, Elridge Energy Holdings Bhd aims to list on the Ace Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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Posted by 129055444514385 > 2019-04-18 08:31 | Report Abuse
Up3
Fernandes: Selling our aircraft monetises all our aircraft at high prices and avoids residual risk. — Bloomberg
PETALING JAYA: AirAsia Group Bhd, which is disposing of 25 aircraft to US-based global private investment firm Castlelake LP, intends to use the proceeds of the sale to ramp up its digital business and reward shareholders.
AirAsia Group chief executive officer Tan Sri Tony Fernandes said the disposal would provide the low-cost carrier with more cash at its disposal.
“Selling our aircraft monetises all our aircraft at high prices and avoids residual risk and allows us to return cash to shareholders and invest in our new digital business,” he said via Twitter following the company’s EGM yesterday.
On Dec 24, 2018, AirAsia announced that it was disposing of 25 aircraft to Castlelake LP in a deal worth US$768mil (RM3.22bil).
Castlelake LP will also purchase four new aircraft that will be delivered to AirAsia in 2019. The 29 planes – Airbus’ A320-200ceo and A320neo – will be leased back to AirAsia.
Later that month, AirAsia’s indirect wholly-owned subsidiary, Asia Aviation Capital Ltd (AACL), entered into a share purchase agreement with Castlelake’s indirect entities for the disposal of its entire equity interest in Merah Aviation Asset Holding Ltd – which owns the aircraft.
The proposed disposal is expected to reduce AirAsia’s gross gearing ratio from 0.53 times to 0.24 times.
Separately, Fernandes said the impact of the MFRS 16 accounting standard on AirAsia is “not very material.”
“Even with that standard and if you use profit and loss for analysis, the impact of the new standard MFRS 16 is about RM35mil a year,” he said via Twitter.
The MFRS 16 is a new accounting standard for leases that took effect this year.
CGSCIMB in a report earlier this month said the new accounting standard would result in higher gearing levels for AirAsia.
The research house noted that AirAsia had sold 79 aircraft to lessor BBAM Ltd Partnership in 2018 and is expected to sell a further 25 planes to lessor Castlelake LP by the third quarter of this year.
Together with the other existing operating lease aircraft, CGSCIMB said AirAsia is expected to capitalise RM11.8bil worth of borrowings related to the operating leases in 2019, effectively bringing back to the balance sheet what had previously been off-balance sheet.
“The impact would be to raise reported gross gearing of 19% in 2018 to 198% on a pro forma basis after MFRS 16.
“The overall impact to profit and loss earnings from the above sale and leasebacks is negative because AirAsia would have to pay for the lessors’ profit margin as well as provide for a higher level of maintenance charges based on lessors’ conditions for lease returns, which tend to be strict.
“The net result would be a squeeze on AirAsia’s profit margins.”
Meanwhile, AllianceDBS Research said AirAsia’s outlook remains steady as market leader in the industry with 41.7% market share.
“Expansion plans are under way with 18 new aircraft for 2019. Available seat kilometres (ASK) is expected to grow at 9.8% and revenue passenger kilometres at 10.1% backed by load factors of 84.7%. Subdued fuel prices would help support earnings,” it said.
“Selling our aircraft monetises all our aircraft at high prices and avoids residual risk and allows us to return cash to shareholders and invest in our new digital business,” he said via Twitter following the company’s EGM yesterday.
On Dec 24, 2018, AirAsia announced that it was disposing of 25 aircraft to Castlelake LP in a deal worth US$768mil (RM3.22bil).
Castlelake LP will also purchase four new aircraft that will be delivered to AirAsia in 2019. The 29 planes – Airbus’ A320-200ceo and A320neo – will be leased back to AirAsia.
Later that month, AirAsia’s indirect wholly-owned subsidiary, Asia Aviation Capital Ltd (AACL), entered into a share purchase agreement with Castlelake’s indirect entities for the disposal of its entire equity interest in Merah Aviation Asset Holding Ltd – which owns the aircraft.
The proposed disposal is expected to reduce AirAsia’s gross gearing ratio from 0.53 times to 0.24 times.
Separately, Fernandes said the impact of the MFRS 16 accounting standard on AirAsia is “not very material.”
“Even with that standard and if you use profit and loss for analysis, the impact of the new standard MFRS 16 is about RM35mil a year,” he said via Twitter.
The MFRS 16 is a new accounting standard for leases that took effect this year.
CGSCIMB in a report earlier this month said the new accounting standard would result in higher gearing levels for AirAsia.
The research house noted that AirAsia had sold 79 aircraft to lessor BBAM Ltd Partnership in 2018 and is expected to sell a further 25 planes to lessor Castlelake LP by the third quarter of this year.