AirAsia X to Hub in Abu Dhabi: AirAsia CEO

05 August 2009

DUBAI — Malaysia’s AirAsia X, one of the few budget airlines flying inter-continental routes, has chosen to make Abu Dhabi its regional hub for connecting flights to possible destinations in Europe, Africa and central Asia.

AirAsia X ruled out Dubai, Sharjah and other cities in the Gulf in selecting the UAE capital as an overseas hub, said Tony Fernandes, Chief Executive Officer of AirAsia Bhd., the regional low-cost carrier that owns a stake in AirAsia X. Both airlines are headquartered in Kuala Lumpur.

“We’re now looking at flying to Abu Dhabi. That will be our first point in the Middle East,” Fernandes told Khaleej Times in a telephone interview on Tuesday. “If things work out well, hopefully we could start flying there toward the latter half of next year.”

Executives at Abu Dhabi Airports Company, operator of the city’s international airport, were travelling and could not immediately be reached for comment.

AirAsia X was among the first carriers to adapt the no-frills business model, which typically applies to flights lasting no more than four hours, to longer journeys of eight hours or more. Most of the other pioneers of long-haul budget flights either dropped the idea because they couldn’t make a profit, or, like Hong Kong Oasis Airlines, went bankrupt trying. AirAsia X appears to be an except ion. Founded in 2007, the carrier’s wide-body Airbus A330 and A340 jetliners fly routes to London, Taipei and to cities in China and Australia. To support its expansion plans, AirAsia X announced an aircraft order at the Paris Air Show in June for 10 Airbus A350s, a larger and more fuel-efficient model that is still under development.

Frankfurt and Cairo are among the prospective destinations that AirAsia X would like to serve from Abu Dhabi, Fernandes said. The airline is also considering flying to cities in eastern Africa, possibly Nairobi. At the moment, he complained, “You just can’t get to East Africa from Asia.”

As a hub, Abu Dhabi would be a place for AirAsia X planes to refuel and take on new passengers before flying onward.

In a first step toward this network expansion, AirAsia X plans in October to begin service between Abu Dhabi and Kuala Lumpur. The carrier will start later this month to sell advance tickets for these flights, Fernandes said.

AirAsia is older and bigger than its long-haul affiliate and has become one of the world’s most successful carriers. Fernandes recognises that the UAE is already home to two low-cost airlines — Sharjah-based Air Arabia and Dubai’s flydubai, but he believes that the Gulf region has enough untapped demand to support more no-frills carriers like AirAsia to fly short routes in and around the Middle East.

Indeed, he might want to start one himself. “Given the right partners, yes, we would,” he said. “It would be great to have a low-cost carrier out of Abu Dhabi. I think there’s room, definitely.

The Saturdays live at Mois Club, Penang

04 Aug 2009

The best day of the week comes back again to Malaysia. The UK girl group phenomenon The Saturdays return to Malaysia and they’re touring all over the region courtesy of the world’s largest Music company Universal Music and AirAsia the world’s best low-cost Airline.

The five-girl pop group comprising Una Healy, Rochelle Wiseman, Vanessa White, Mollie King, and Frankie Stadford, released their debut album Chasing Lights recently in March in Malaysia. The album, released late last year in the UK, has to date spawned four hit singles, including the top 10 hit, If This Is Love, Issues and its biggest UK singles hit, Just Can’t Get Enough, a remake of single from Depeche Mode cater for the charity work of Comic Relief.

The all-girl pop group recently came down to Malaysia for a Press Conference on the 12th of May 2009 to officially launch their album “Chasing Lights”. The Press Conference held at Zouk, KL showed the girls to the Malaysian and Regional Media from countries such as Hong Kong, Indonesia, Singapore and many other countries who welcomed the five British Beauties. The Saturdays were flown all the way from the UK by AirAsia, the world’s best low-cost airline. The showcase was in conjunction with the airlines’ brand campaign “Have You Flown AirAsia Lately” when the girls were in KL in the month of May to position the airline as trendsetters. AirAsia, named the World’s Best Low-Cost Airline by Skytrax in a survey of 16.2 million traveler interviews, has the most extensive network of destination in Asia.

This time around AirAsia is bringing the group for a full-fledged regional tour in August covering Malaysia, Thailand and Manila in Southeast Asia. Southeast Asia is the first tour destination of the group. The Saturdays first showcase performance will be in Zense night club in Bangkok on the 4th of August and before they head on to Malaysia’s largest island state Penang, where they’ll be performing on the 5th of August at Mois Club. One of the hottest and happening nightspots right in the heart of Penang, where invited guests will be there to catch these beautiful ladies strut their dance moves. This tour rides on the girls climbing popularity in the region having had massive success with their singles “UP” and “ISSUES” in the #1 highest rated English radio station Hitz.FM.

Don’t miss the amazing opportunity to catch the girls live in Penang as they’re only here for a one-night performance that’s not to be missed. For those of you who want to get tickets to this non-stop dance party tune in to your local radio stations and newspapers to get your names into the guest list. So what are you waiting for, get moving and get ready to party like it’s a Saturday!

AirAsia to cut debt with funding; stock falls 6 pct

04 Aug 2009

KUALA LUMPUR- Southeast Asia's largest budget carrier, AirAsia (AIRA.KL), has seen strong demand for its share issue worth $172 million, which it will use to reduce its debt, Chief Executive Officer Tony Fernandes said on Tuesday.

The airline plans to place up to 481.1 million shares, representing a 20 percent stake, to buyers to be identified later, sending its stock 6 percent lower.

As of mid-June, AirAsia was one of Airbus's biggest customers in terms of outstanding orders.

Fernandes said the company's new shares will be priced at a 5-10 percent discount to the market price of AirAsia shares at the time of issue.

"There's a lot of liquidity in the market. We think (now) is a good time to reduce our gearing," he told Reuters by telephone.

By 0400 GMT, AirAsia shares were down 6.5 percent at 1.44 ringgit with more than 5.0 million shares traded against a daily average of 4.3 million shares over the past 30 days.

Maybank Investment Bank analyst Khair Mirza said the airline's gearing will drop to 3 times by end-2009 from 3.8 times. "But we consider the 17 percent earnings per share dilution a steep price to pay for a temporary respite," said Khair, who has a sell recommendation on the stock.

AirAsia has received strong expressions of interest from both foreign and local institutional funds for the new shares, Fernandes said, adding that the placing is expected to be completed by the second week of September.

The stock has jumped 69 percent so far this year, outperforming a 34 percent rise in the broader market .KLSE.

"We recommend investors to switch to Malaysia Airports (MAHB.KL) for low-risk leverage on the air travel market's potential recovery in 2010," said Maybank's Khair.

AirAsia releases its second-quarter results on August 12.

Proposed amendments to AirAsia Berhad 's memorandum of association

04 Aug 2009

The Board of Directors' of AirAsia Berhad (the Company or AirAsia) wishes to announce that the Board had on 3 August 2009 proposed to seek shareholders' approval on the Proposed Amendments by way of a Special Resolution at the forthcoming Extraordinary General Meeting of the Company to be convened at a later date. The proposed amendment to the Memorandum of Association is to more accurately reflect the principal activities of the Company and its subsidiaries and to coincide with the increased growth in terms of areas of ancillary products and/or services being offered to compliment the principal activities.

AirAsia targets RM1bil cash reserves

04 August 2009

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.

A filepic shows an AirAsia aircraft at KL International Airport. Datuk Seri Tony Fernandes (inset) says the budget airline plans to raise funds to reduce its gearing and help restructur e its finances — AFP

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.

AirAsia sees more than RM1b in coffers

Low-cost carrier AirAsia Bhd (5099) expects to have more than RM1 billion in its coffers by the end of the year, as it grows its profits and undertakes a private placement, says its chief.

“The cash will be used to lower the group’s gearing,” group chief executive officer Datuk Seri Tony Fernandes told reporters after the airline’s annual and extraordinary general meetings in Sepang yesterday.

In an announcement to Bursa Malaysia yesterday, AirAsia has proposed a private placement of up to 481.14 million new ordinary shares of 10 sen each, which could potentially raise gross proceeds of up to RM601.43 million.

The proceeds are based on an issue price of RM1.25 per placement share, representing a discount of 3.10 per cent to the five-day weighted average market price of AirAsia shares up to and including July 27 of RM1.29.

This will represent up to 20 per cent of the issued and paid-up share capital of AirAsia as at July 27 of RM237.56 million, comprising 2.37 billion shares.
“Our aim was just to raise some RM500 million to reduce our net gearing.

We have received interest from many local and foreign investors,” said Fernandes.
The placement will reduce the airline’s net gearing from 3.71 times to 2.56 times based on its unaudited accounts as at March 31 2009.

As much as RM68.76 million of the proceeds will be used to re-pay part of AirAsia’s interest-bearing borrowings.
When asked if the placement will be done in tranches, Fernandes said the group would rather place the 20 per cent altogether upon receiving the necessary regulatory approvals.

The private placement is expected to be completed by the fourth quarter of this year.

Meanwhile, the group’s current cash and cash equivalents as at March 31 2009 stood at RM223.99 million.
On the airline’s overall business, Fernandes said passenger growth was good for its second quarter ended June 30 2009, with a load factor of 76 per cent.

“We do hope to announce a positive second quarter and move towards a profitable full year,” he said.
AirAsia is expected to release its fiscal second-quarter results within the next two weeks.

It posted a net profit of RM203.1 million for its first quarter.
Fernandes also said that AirAsia is currently in discussions with Malaysia Airports Holdings Bhd over the outstanding airport taxes owed to the airport operator.

“The airport charges should be resolved in the next two to three weeks,” he said.
Fernandes also denied that AirAsia is eating into Malaysia Airlines’ (MAS) market share.

Rather, it has grown the domestic and regional air travel markets.
“The only way we have grown from 200,000 to 24 million passengers is by offering low fares and developing 44 new routes.

I can’t see how we can cannibalise when we start flying brand new routes not served by MAS,” he said.

AirAsia to sell 20% stake in $172 mln share placement

03 August 2009

KUALA LUMPUR - Southeast Asia's largest budget carrier, AirAsia (AIRA.KL), has finalised a plan to raise up to $171.6 million in a share placement to strengthen its balance sheet and increase its financing flexibility.

The airline plans to place out up to 481.1 million AirAsia shares, representing a 20 percent stake, to buyers to be identified later, it said in a statement to the stock exchange. "It (the share placement) will also reduce the current net gearing position of the company and its subsidiaries," it said.

Malaysia's No.2 bank, CIMB, is the adviser and placement agent for the exercise.

The amount to be raised is based on an indicative price of 1.25 ringgit per placement share, a discount of 3.1 percent to the 5-day weighted average market price of AirAsia shares up to July 27 of 1.29 ringgit, it said.

The stock ended on Monday at 1.54 ringgit.

The actual number of shares to be placed out will be determined after the airline obtains regulatory approvals, it said.