Asia Aviation Capital Ltd, a wholly-owned subsidiary of AirAsia Berhad, has entered into agreements to sell its aircraft leasing operations to BBAM Limited Partnership-managed entities for US$1.18 billion.
Under the agreement, AirAsia will sell a portfolio of 84 aircraft and 14 engines which will be acquired by FLY Leasing Limited (FLY), Incline B Aviation Limited Partnership (Incline) and Nomura Babcock and Brown (NBB). Of this portfolio, 79 aircraft and 14 engines will be leased back to AirAsia and its affiliates.
FLY and Incline are also in agreements to acquire 48 aircraft to be delivered to AirAsia Berhad and an option to acquire a further 50 aircraft to be delivered.
AirAsia Group CEO Tony Fernandes said the sale is in line with its strategy of disposing of non-core assets and businesses. He continued: “When we bought these planes, our gearing was high and some people could not see why we wanted to own these assets. This deal shows it was the right strategy as we have something of value to dispose in return for cash and an equity relationship in two great companies, while removing residual risks.
“This is a perfect outcome to a strategy we started in 2004 and I’m thrilled at the execution of our long-term vision. We have now disposed of most of our physical non-core assets and we are thrilled to be embarking on our new digital strategy which will build a very valuable group of assets,” he added.
As part of the disposal consideration, AirAsia Berhad will receive non-cash considerations comprising of $50 million in FLY American Depositary Shares (ADS), this will result in AirAsia Berhad owning approximately 10.2% of FLY.
AirAsia Berhad will also commit $50 million into Incline Parallel Funds, which will invest alongside the Incline Aviation Master Fund in global aviation investments. The airline reported that as a result of the disposal, AirAsia Berhad is expected to see a gain on sale of approximately RM967.1 million.
Credit Suisse, BNP Paribas and RHB are acting as joint financial advisors, and Milbank and ZICO are acting as counsels to AirAsia Berhad.
