KUALA LUMPUR, April 17 — AirAsia Group Bhd’s decision to sell 25 of its aircraft to US-based global private investment firm Castlelake LP, is part of the group’s plan to focus on its digital business.
Chief executive officer Tan Sri Tony Fernandes said the disposal allowed the airline company to monetise the aircraft at high prices and thus avoid residual risk.
He added the disposal also allows the carrier to give cash returns to shareholders and invest in its new digital business.
He elaborated that the Malaysian Financial Reporting Standard (MFRS) 16 had no impact on AirAsia’s cash position.
“I value companies on cash generation, and even with that standard, if you use profit and loss (P&L) for analysis, the impact of the MFRS 16 is about RM35 million a year. Not very material,” he tweeted during the group’s extraordinary general meeting here today.
Previously, CIMB Equities Research opined that the low cost carrier’s net gearing forecast for financial year 2019 would hit 145 per cent of equity upon the capitalisation of operating leases, with the adoption of MFRS 16 since January 1, 2019.
Fernandes said the move to dispose of the aircraft received mixed reaction from research houses.
“Selling our aircraft is a brilliant move. Some analysts complained that we bought too many aircraft, but the same analysts now say there’s too many leased aircraft,” he tweeted.
AirAsia announced in December last year that it would be selling 25 aircraft to Castlelake LP for RM3.2 billion.
This will be carried out via the sale of AirAsia Group's entire equity interest in Merah Aviation Asset Holding Ltd — held by the group’s indirect wholly-owned subsidiary, Asia Aviation Capital Ltd (AACL) — to AS Air Lease Holdings 5T DAC, an entity indirectly controlled by Castlelake. — Bernama