Air Asia mulls fund raising through share sale

Saw this news in Business Times on Air Asia looking to raise fund through share sale. It is quoted below.

For its financial results, do look for here . It is great that Air Asia continues to grow during this tough time.
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AIRASIA Bhd, Southeast Asia’s largest low-cost airline, said it’s considering raising about RM500 million (US$143 million) to fund expansion in the Malaysian company’s biggest share sale since listing in 2004.

“We’re looking at it,” chief executive officer Datuk Seri Tony Fernandes said in an interview today. “If our growth requires us to raise more cash, then we’re not averse to it.”

AirAsia, which has ordered 175 Airbus SAS planes, may raise the money in a stock sale or a rights offer to shareholders, Fernandes said. The timing or the structure of the transaction hasn’t been decided, he said.

The airline’s shares have surged 50 per cent this year in Kuala Lumpur trading, providing currency to raise funds as debt markets wither in the financial crisis. Fernandes expects Airbus to deliver about 24 planes annually for the next three to four years as the airline adds routes to India and boosts flights to China.

“Raising debt would be much cheaper, but I don’t think companies have a lot of choice these days,” said Raymond Yap, an analyst at CIMB Investment Bank Bhd in Kuala Lumpur with an “outperform” rating on AirAsia. Yap issued a report earlier today saying AirAsia may be considering a rights issue.

The carrier had a fleet of 74 planes at the end of March 31, it said in a statement yesterday after reporting its highest quarterly profit since the final three months of 2007. AirAsia had 59 Airbus A320 aircraft and 15 Boeing Co. 737s.

Based on AirAsia’s profit-growth forecasts, a RM500 million share sale won’t necessarily dilute earnings, Fernandes said. The Sepang, Malaysia-based company had RM224 million of cash on its books at the end of March 31.

AirAsia today rose 4 per cent to RM1.30 at the 12:30 pm break on the local stock exchange, set for the highest close in more than a year. Malaysia’s benchmark Composite Index added 0.3 per cent.

AirAsia’s second-quarter passenger traffic is headed for a 21 per cent jump, matching last quarter’s increase as budget- conscious travelers look for cheaper air fares, Fernandes said.

“For the moment, things are rosy,” he said in a Bloomberg Television interview. The “second-quarter demand looks good.”

Profit at the airline climbed 26 per cent in the first quarter to RM203.2 million after the company flew more passengers and added routes, the company said yesterday after the stock market closed.

The carrier’s surging traffic contrasts with slumps at regional rivals including Singapore Airlines Ltd, which is cutting routes and capacity. AirAsia, which expects to fly 24 million people this year, is increasing its capacity by about 20 per cent each quarter, the chief executive said.

AirAsia, which flies to one destination in India, will fly to at least six more airports in the South Asian nation before the end of 2009, Fernandes said. -- Bloomberg

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Air Asia to Fly to India

Datuk Tony Fernandes continued to expand Air Asia's empire, and today he declared that his mission as CEO is done!

I am wondering what it indirectly implies? Does it mean that he is leaving Air Asia?

He was saying that after Air Asia secured their last target - India and would commence flight on 1st December. This completed the picture of ASEAN, Hong Kong, China, Australia and now India. He is saying that the rest of expansion beyond that would be for Air Asia-X to do it. Is he implying that he would be focusing more on Air Asia X?

For full article, do go here .

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KUALA LUMPUR: AirAsia has finally conquered its “last frontier” with the Indian Government giving the low-cost carrier approval to fly to India.

AirAsia chief executive officer Datuk Tony Fernandes said the airline would start selling tickets to Tiruchi in Tamil Nadu at midnight on Wednesday with the first flight to take off on Dec 1 at 7.40am.

“It will be a daily flight and we are looking at even adding a second flight now as the initial response has been tremendous,” he told reporters Monday during a press conference here.

Special promotional prices for the flight will cost RM49 one-way while the normal ticket price will cost about RM200 one-way.

Fernandes said plans are now in the works for the next one and a half years to fly to many more destinations in India including Madras, Madurai and Kochi with AirAsia.

“AirAsia-X meanwhile will fly to places like New Dehli, Bombay, Hyderabad, Bangalore and Calcutta,” he added.

He said AirAsia would initially invest between RM5mil to RM7mil to set up infrastructure in India and he is confident that it will do well.

“This is an exciting period for us and I’m looking at a high load factor of at least 90% for our first flight,” he said.

Fernandes said it had taken the airline seven years to reach this stage and with India now in its pocket, his mission as CEO is complete.

“I had said then that India would be the last place we need to get to. It is now over to AirAsia-X to grow the business to Japan, South Korea, Europe and the United States.”

Fernandes said he expects a huge growth in Indian tourism in Malaysia and that he is not worried about the global economic slowdown.

“I believe that you have to be innovative. While other airlines are cutting back we are expanding and can take up their slack.

“Maybe some of the population in India cannot afford to fly with us, but there are many more who can and this is the market we are after,” he said.

Fernandes also said, in response to recent Malaysia Airlines (MAS) advertisements, that his battle with MAS is over and that it is time to move on.





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Would encourage any of my blog readers to share with me any event that you come across. As long as the event/activity/initiative is education/charity/youth oriented and is not-for-profit, I would be more than happy to post it to share!

Air Asia Going Private

Would Air Asia stock price rally in this coming week?

Malaysiakini ran an article on possibility of Air Asia going private. The article is here . As investors are not willing to pay premium for Air Asia growth story, they decide to bring it private.

Another news that would help Air Asia a lot is that Transport Ministry have given the approval for Air Asia to fly Kota Kinabalu-Singapore, Kuching-Singapore, Miri-Singapore route. This would further increase the profitability of Air Asia!!!

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Click here to read more of Chen Chow's posts

Would encourage any of my blog readers to share with me any event that you come across. As long as the event/activity/initiative is education/charity/youth oriented and is not-for-profit, I would be more than happy to post it to share!

At LCCT - Onwards to Philippines

Currently blogging at LCC-T in KL.

Am very excited for my first overseas assignment, since I joined JobStreet.com . Would be visiting Philippines for the next 4 days! It is my first trip there! =)

Would get the chance to attend JobStreet.com Philippines Career Congress for School Administrators . It would be exciting!

Besides that, this is also my first experience taking Air Asia.com , despite my many years of admiration of Datuk Tony Fernandes and his staff. This is the first time for me to experience it! As of now, have been pretty happy with the services provided by them!

Besides going to meet my JobStreet.com colleagues in Philippines, I am going to get the chance to catch up with Krysty, from CSP5! It has been 4 years since CSP and would definitely cherish the opportunities to meet her there. Thanks, Krysty for coming out to meet up on 31st July.

Just got an email from my former civic tutor (essentially form teacher) at Raffles Junior College, Dr. Ho Weng Kin. Great to hear that Dr. Ho is now back working at Raffles JC! Would definitely looking forward to meet up with Dr. Ho one day.

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Click here to read more of Chen Chow's posts

Would encourage any of my blog readers to share with me any event that you come across. As long as the event/activity/initiative is education/charity/youth oriented and is not-for-profit, I would be more than happy to post it to share!