AirAsia gains most in 2 months

AIRASIA Bhd, Southeast Asia’s largest discount airline, climbed the most in two months on the Kuala Lumpur stock exchange after saying its largest shareholder is still considering buying out the carrier.

At mid-day, AirAsia Bhd rose 2 sen, or 1.8 per cent, to RM1.15, its highest close since November 5.

Tune Air Sdn Bhd, whose backers include AirAsia chief executive officer Datuk Seri Tony Fernandes, said yesterday it continues to pursue a plan to take the airline private.

With the global economy entering a recession and Malaysia’s government forecasting the slowest growth in eight years in 2009, the proposal could meet challenges, said analyst Juliana Ramli.

“There are major hurdles to a privatization - the increase in debt, the weaker economic outlook and the tightening credit conditions,” Ramli, a Hwang-DBS Vickers Research analyst, said by phone. She has a “fully valued” rating on AirAsia.

Tune Air is still in talks with financial institutions and potential investors to fund a buyout, AirAsia said in a statement yesterday after the stock exchange closed. Tune Air owns about 31 per cent of AirAsia, according to Bloomberg data.

AirAsia said on October 7 that the “indicative” price for a potential buyout was RM1.35 for each share. AirAsia stock that day closed at RM1.27.

The potential offer is “still quite low,” even compared to today’s prices, said Ramli at Hwang-DBS.

Malaysia’s government expects domestic economic growth to slow to 3.5 per cent in 2009 from about 5 per cent this year. - Bloomberg