AirAsia to raise $257 million in share sale to founders

Bloomberg

AirAsia Bhd. is raising 1 billion ringgit ($257 million) selling stock to a company controlled by its founders as the continent’s biggest budget airline raises cash to finance aircraft purchase and pare down debt.
The airline will issue 559 million new shares at 1.84 ringgit apiece to Tune Live Sdn, equally owned by Chief Executive Officer Tony Fernandes and Chairman Kamarudin Meranun, AirAsia said in a statement to the Kuala Lumpur stock exchange. The sale represents 16.7 percent of the enlarged capital of the Sepang, Malaysia-based carrier.
Fernandes and Kamarudin control another company Tune Air Sdn, which is the largest shareholder of the airline at 18.9 percent. That holding company’s stake in AirAsia will decline to 15.7
percent after the new share sale.
AirAsia is the second-best performing stock on the MSCI Asia Pacific Index this year amid speculation that its key shareholders could step in to strengthen its finances or take the company
private.
Mounting competition from Malaysia Airlines Bhd. and low-cost carriers led to a drop in ticket prices in the region and the carrier’s stock dropped to its lowest in August last year.
Southeast Asian airlines, particularly budget carriers, have suffered from a price war as they jostle for market share. Short-haul yields at carriers in the region will continue to be squeezed this year as airlines add capacity, Bloomberg Intelligence said last month.
Fernandes, 51, assumed 40 million ringgit of debt when he bought AirAsia for 1 ringgit in December 2001, according to the airline’s website. The carrier had two old aircraft when Fernandes took charge.
Prior to running AirAsia, Fernandes was an employee at Richard Branson’s Virgin Group.
The budget carrier now has more than 100 planes with operations spanning India, the Philippines, Indonesia and Thailand.
The company, which plans to start flights at its Japan venture this year, is one of the biggest customers for Airbus Group SE’s narrowbody aircraft.
AirAsia Berhad (Bhd.) is a Malaysian low-cost airline headquartered near Kuala Lumpur, Malaysia. It was the largest airline in Malaysia in fleet size and destinations. AirAsia group operates scheduled domestic and international flights to 100 destinations spanning 22 countries. Its main hub is klia2, the low-cost carrier terminal at Kuala Lumpur International Airport (KLIA) in Sepang, Malaysia. AirAsia operates with the world’s lowest unit cost of US$0.023 per available seat kilometres (ASK) and a passenger break-even load factor of 52 percent.
It has hedged 100 percent of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines, and achieves an average aircraft utilisation rate of 13 hours a day.