AirAsia Shares Rise on Management Buyout Plan Report

Nov. 20 (Bloomberg) -- AirAsia Bhd., Southeast Asia's largest low-cost carrier, rose the most among Kuala Lumpur benchmark index companies after the Star said shareholders may announce a buyout offer next week.

The carrier rose 2.7 percent to 1.16 ringgit at 11:48 a.m., after earlier gaining as much as 4.4 percent. The Kuala Lumpur Composite Index fell 1.8 percent.

Tune Air Sdn., controlled by AirAsia Chief Executive Officer Tony Fernandes, may make a buyout offer of between 1.30 ringgit and 1.35 ringgit a share, the Star said today, citing unidentified people. The company had previously said it may make a 1.35 ringgit bid, if it could secure the financing.

``There is very significant likelihood of a general offer,'' Paul Dewberry, a Merrill Lynch & Co. analyst, wrote in a report today. The announcement may come alongside the company's third-quarter results next week, he added.

Dewberry upgraded the carrier to ``buy'' from ``underperform'' on the buyout plan. He set a target price of 1.35 ringgit.

CIMB Bhd. may lead the group of banks financing the buyout, the Star said.

AirAsia plans to fly to Tashkent next year

JOHOR BARU, MALAYSIA: AirAsia will begin flights to the Uzbek capital of Tashkent by the end of next year, said chief executive officer Datuk Seri Tony Fernandes.

He said the budget airline felt that Central Asia and Eastern Europe were huge potential markets and his company had already conducted initial studies in Uzbekistan and Kazakhstan.

"We can do Uzbekistan next year. With the huge Asian network, many people from South-East Asia would want to go to Uzbekistan," he said.

He said the leg would open up new lines of tourism and business.

He pointed out that the historic city of Samarkand was world famous and attracted tourists.

Fernandes said AirAsia had always been about opening up new areas and markets and felt proud that the company was recognised as providing a service to the country.

He said AirAsia would probably start with three to four flights a week.

When asked about the rates, Fernandes said that it was still too early to decide but would probably around RM800 to RM900.

On Monday, Prime Minister Datuk Seri Abdullah Ahmad Badawi, who is on an official visit to Uzbekistan, said he had asked Fernandes to consider flying to Tashkent.

AirAsia stock jumps

AIRASIA Bhd (5099) jumped as much as 3.5 per cent, its second-biggest gain this week in Kuala Lumpur trading, after a newspaper reported that the carrier’s largest shareholders may announce a buyout offer next week.

At close, the stock rose 4 sen, or 3.5 per cent, to RM1.17, the most since September 12 and the third-biggest gainer on the benchmark Composite Index.

Tune Air Sdn Bhd, which owns 31 per cent of AirAsia, will probably offer the buyout at a price of RM1.30 (36 US cents) to RM1.35 a share, the paper said, citing people it didn’t identify.

CIMB Bhd may lead the group of banks to finance the buyout, the newspaper said, citing people it didn’t identify.

Return money of those who booked tickets before fuel surcharge waiver, AirAsia urged

BUDGET carrier AirAsia has been urged to look into the possibility of refunding the fuel surcharge to passengers who made their flight bookings before the surcharge was waived, reported Sinar Harian.

Federation of Malaysian Consumer Associations adviser Chua Kim Tee welcomed the airline’s move to waive the surcharge on Nov 11, but said the benefits should also be extended to passengers who made advance payments for their flights prior to the announcement of the waiver.

“In this context, maybe AirAsia can return the fuel surcharge which had been paid earlier as the passengers had not used the service,” he said.

“When the global oil prices go up, we have no choice but to pay the surcharges.

“But with the current market situation, abolishing the surcharge is the right way to go.”

AirAsia X prepares for launch of Stansted Routes

The long haul, low cost carrier, AirAsia X is set to announce the launch of new flight routes from London Stansted to Kuala Lumpur next week.

The Malaysian airline explained that Stansted Airport's good connectivity was the reason for their choice of base.

The airline has arranged a press conference for the 25th of November at London County Hall where it will be announcing "massive news for London".

Services from Stansted are to be launched early next year originally aiming for the £300 mark, however fuel prices have pushed the figure up to a more likely £350.

Richard Branson owns 20% of the AirAsia subsidiary which is the biggest low-cost airline in the region.

Chief executive Azran Osman-Rani confirms that they have been finalising preparations for the inaugural flight and say that the current global economic climate has not affected operations in any way.

BNP Paribas, Natixis seal US$336m financing for AirAsia planes

KUALA LUMPUR: BNP Paribas and Natixis Transport Finance have closed for AirAsia Bhd a US$336mil Sharia-compliant financing for up eight Airbus 320-200 aircraft.

BNP Paribas and Natixis Transport Finance are the lead arrangers, global coordinators and book runners for the financing, according to a joint statement issued on Wednesday.

This Sharia-compliant French Single Investor Ijarah is the first Islamic French-Malaysian optimised transaction of this kind.

“Above a cost efficient 100% financing structure, the Islamic Ijarah ensures that AirAsia’s capital and investment allowances are preserved.

“Purchase of each aircraft is through a mix of euro-denominated equity, a US dollar denominated investment agency agreement – Wakala from Islamic financiers and a US dollar-denominated Wakala granted by AirAsia and refinanced by a ringgit denominated Commodity - Murabaha,” the statement said.

AirAsia deputy group chief executive officer Datuk Kamarudin Meranum said the unique financing structure had enabled the low-cost carrier to continue to enjoy overall competitive financing terms for its aircraft purchases, especially under current market situation.

He added the structure had also encouraged the innovation and creativity in structuring Islamic products and promote the development of aircraft financing in Malaysia with the participation of RHB Islamic and Bank Rakyat.

AirAsia flies to Nakhon Si Thammarat

Thai AirAsia on Thursday inaugurated its Bangkok-Nakhon Si Thammarat flight, increasing the number of its domestic routes to 11.

The flight is servied by Boeing 737 aircraft, quoting the starting price of Bt750.

Nakhon Si Thammarat Governor Phanu Uthairat welcomed the new flight, citing that it would give convenience to people in the province as well as investors. He said the province and the airline are planning a joint tourism promotion campaign.

Sabah To Get More Direct Flights From Singapore

KOTA KINABALU, Nov 18 -- The number of direct flights from Singapore to Kota Kinabalu will increase to 22 with the start of Jetstar Asia Airways' flights from Dec 2.

Sabah Tourism, Culture and Environment Minister, Datuk Masidi Manjun, said at present three airlines -- Malaysia Airlines (MAS), AirAsia and SilkAir -- had 18 flights a week.

He said with the increase in flights it would be a good strategy to promote Sabah as an ideal location for meetings, incentives, conventions and exhibitions (MICE) and strengthen the tourism sector in the state.

"We will cooperate with the five-star hotels in planning our strategies, activities and promotion in Singapore to popularise Sabah as the ideal MICE location," he said at the State Assembly here Tuesday.

Masidi said this in reply to a question by Datuk Mohd Arifin Mohd Arif (Membakut-BN) on the state's strategy to strengthen tourism in the face of the current global financial crisis.

He said the ministry would also focus on markets which had direct flights to Sabah and strengthen cooperation with airlines which had air access to Sabah like MAS, AirAsia, SilkAir, Dragon Air, Korean Air, Asiana Airlines, Royal Brunei Airlines and Cebu Pacific.

Masidi said Sabah would also increase marketing and promotional activities in destinations which offered low-cost flights.

"About 80 percent of the tourists come to Sabah for adventure and to relax and the low-cost flights have helped to boost tourism. More tourists are using the low-cost airlines during the present global financial crisis," he said.

Masidi said the real implication of the global financial crisis would be seen early next year.

However, he said, the United Nations World Tourism Organisation has reported that the tourism sector would be able to weather the challenge.

He said only the frequency of travel and expenditure would be reduced.

"Thus, the ministry will focus on domestic and regional markets like Singapore, Philippines, Indonesia, Brunei, China and Australia.

"We will also promote tourism in regional hubs in Hong Kong and Tokyo which have connections to other world destinations," he said.

AirAsia privatisation still in the pipeline

KUALA LUMPUR: Tune Air Sdn Bhd is still in negotiations with financial institutions and prospective investors to fund the potential privatisation of AirAsia Bhd, the low-cost carrier told Bursa Malaysia yesterday.

AirAsia said Tune Air was still negotiating the terms and conditions with the institutions and investors and would make an appropriate announcement when Tune Air had formed a firm intention on whether to proceed or not with the privatisation.

AirAsia had said last month that Tune Air was considering taking the carrier private at an indicative price of about RM1.35 per share, subject to change depending on the market conditions at the point of decision.

It said the options of how best to optimise and expand its operations were being developed and the privatisation option was subject to the availability of financing on acceptable terms from financial institutions and other potential investors, as well as conducive market and industry conditions.

The stock rose two sen to RM1.13 with over 2.4 million shares traded yesterday.

AirAsia urged to look into KL-Tashkent route

TASHKENT (Uzbekistan): Budget carrier AirAsia has been urged to look into the viability of providing a direct air link between Kuala Lumpur and Tashkent.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said he had conveyed this to AirAsia chief executive officer Datuk Seri Tony Fernandes who has agreed to consider this.

“I told Datuk Seri Tony Fernandes of the opportunities here and he said AisAsia would study this immediately. It will be good if a Malaysian carrier can also provide air services to this part of the world.

“Also, since AirAsia is a low cost carrier, it will be easeir for them to start the service,” he told Malaysian reporters at the sidelines of his three-day official visit to Uzbekistan.

In his talks with President Islam Karimov earlier, the Uzbekistan leader had requested the Malaysian Government consider providing air sercices to Tashkent.

At pesent, the only direct link between the both capitals was provided by Uzbekistan Airways. It has been flying twice weekly between both cities since 1996.

Abdullah said both countries could also expand on economic and tourism activities if there was a direct air service between both countries.

“Since Uzbekistan is a land locked nation, it would be good if we could have more flights to increase the movement of people and goods,” he said.

He said although bilateral trade between both countries has increased from RM90mil in 2006 to RM130mil in the first nine months of this year, this was relatively small.

Abdullah said it was also important that another air service was provided to enable more Malaysians, particularly Muslims, to visit Islamic historical sites here. Among these are the ancient cities of Samarkand, Bukhara and Tashkent which were important Islamic civilisations.

Also located here are the mausoleums of famous Muslim scholars such as Imam Bukhari, Ibnu Sina, Al Termizi and Bibihanoum.

Asked why several memoranda of understanding signed between both countries in 2005 had yet to take off, Abdullah said Uzbekistan, a former republic under the Soviet Union, was a young nation which was still in the midst of introducing reforms.

“They are conducting reforms but this is taking some time. They are liberalising several aspects of the economy and administration and once this is done, I am sure it will be a conducive place to do business,” he said.

Abdullah said Karimov also praised Malaysian oil company Petronas which has been carrying out extensive oil and gas exploration projects in the country’s four regions.

“Petronas has also set up joint ventures with companies from other countries and has been doing a tremendous job. He told me that the government was considering giving more concessions to Petronas as it has proven to be a worthy and credible investor,” he said.

He said Malaysia was also prepared to take in more students from Uzbekistan to pursue tertiary education. At present, there were some 70 students from here studying in Malaysia.

Abdullah, his wife Datin Seri Datin Jeanne Abdullah and the members of his delegation would leave for Turkmenistan on Wednesday for a two-day official visit to the former Soviet republic.

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