Budget carrier sees RM500mil proceeds from private placement
SEPANG: AirAsia Bhd, which is looking to raise about RM500mil from the private placement of 20% of its share capital, is targeting RM1bil cash reserves by year-end.
Group chief executive officer Datuk Seri Tony Fernandes said the RM1bil cash to be raised might or might not include the RM500mil from private placement, which the board approved yesterday.
“The RM1bil cash reserves will be achieved from various activities that include improving efficiency, increasing seat load factor and other expenses wherever possible,” he told a media briefing after the company’s AGM and EGM yesterday.
Fernandes said the fund raised from the private placement would be used mainly to reduce the airline’s gearing and help restructure its finances.
An analyst with TA Securities said post-private placement, AirAsia’s gearing ratio was expected to fall to 2.7 times from 3.7 times now, which is a key concern among investors on the stock.
On the airline’s fuel-hedging strategy, Fernandes said: “AirAsia is currently on spot fuel buying, which is now proven to be the right decision, and we’ve managed to unwind our fuel derivative contracts.”
On why the board did not equity-account the airline’s share of losses in Thai AirAsia Co Ltd (IAA), Fernandes said it was the advise given by auditor PricewaterhouseCoopers.
AirAsia deputy group chief executive officer Datuk Kamarudin Meranun said the company had wanted to equity account the losses of IAA into its books.
“But we were advised not to do so by our auditors as there were still some outstanding issues then relating to IAA’s former stakeholders Shin Corp and later Temasek Holdings,” he said.
On AirAsia eating into Malaysian Airlines’ market share, Fernandes refuted the claim. “We have not done so. In fact, we have opened up new routes to allow more people to fly at budget fares never done by any other airlines.”
On the dispute with Malaysia Airports Holdings Bhd over various outstanding charges, Fernandes said: “We are hopeful that the issue will be resolved in two weeks.”
Asked about AirAsia’s performance going forward, he said: “We expect to be profitable this financial year, which goes to say a lot for us, when most other airline companies are making losses in these challenging times.”
He also said AirAsia’s second-quarter results (which are soon to be announced) should be reasonable.
The budget airline recorded a net profit of RM203.15mil in the first quarter ended March 31, up 26% from RM161.28mil in the previous corresponding period.