AirAsia revamps with Newco, listing of Indonesia’s business

Under the proposal, the Newco will assume the listing status


AirAsia Bhd yesterday announced the proposed exchange of 3.4 billion shares in the low-cost carrier (LCC) with similar number of shares in a newly created investment holding company (Newco), AirAsia Group Bhd.

The company said the transfer of the shares to the Newco was part of the carrier’s internal reorganisation.

Under the proposal, the Newco will assume the listing status and AirAsia shares will be listed under the carrier’s holding company.

The carrier also announced that its wholly owned subsidiary AirAsia Investment Ltd (AAIL) has executed multiple agreements to partially dispose, and subsequently convert its perpetual securities investments in PT Indonesia AirAsia (IAA) into new shares in PT Rimau Multi Putra Pratama TBK (RMPP), a company listed on the Indonesia Stock Exchange.

Under the proposed arrangement, RMPP shall be the new holding company for IAA.

The agreements include conditional sale of AirAsia and AAIL, AirAsia and PT Fersindo Nusaperkasa (FNP) and conditional standby buyer agreement between RMPP, AAIL and FNP.

“IAA is expected to issue new shares in RMPP, whereby it shall be the new holding company of IAA. The proposed transaction is expected to be completed by the fourth-quarter of 2017 (4Q17),” Air-Asia said in a statement.

The deal, said AirAsia, will provide IAA direct access to the equity and debt capital markets for future fundraising and provide AirAsia Group with the financial flexibility to pursue growth opportunities
in the region and beyond.

AirAsia said IAA plans to double the fleet size by 2020, as Indonesia is expected to be the sixth-largest market for air travel by 2035 with 242 million passengers — three times the size of today’s market.

Meanwhile, AirAsia’s net profit slumped 73% to RM92.5 million for 2Q17 ended June 30, 2017, from RM342.1 million recorded 12 months ago as higher operating expenses eroded the LCC earnings.

AirAsia said the lower profit was due to a one-off deferred tax charge of RM212 million.

However, Asia’s largest LCC plans to add 22 planes in the second-half of this year (2H17) to cater for the booming air travel market. “This will be one of the fastest pace of expansion in the last few years, made possible due to the favourable competitive and operating environment of aviation in Asia,” the low-cost airline told Bursa Malaysia in an exchange filing yesterday.

IAA participated in the Indonesia Tax Amnesty Programme, where in accordance with the amnesty programme, IAA shall no longer be liable for any tax liability prior to 2016, while the existing deferred tax asset in IAA’s books prior to 2016 will also no longer be deductible against future profits.

AirAsia’s revenue for the period under review, however, surged 46% to RM2.38 billion against RM1.62 billion in the same period a year ago, attributed to a 10% increase in total passengers carried and a strong
seat load factor of 89% in 2Q17 compared to 87% in 2Q16.

Average fare has increased 11% from RM160 in 2Q16 to RM177 in 2Q17, while the overall revenue per available seat kilometre of the group has improved 11% from 13.89 sen in 2Q16 to 15.35 sen in 2Q17.

During the quarter, the group has also delivered an additional 762,963-seat capacity compared to 2Q16, which represented an additional 8% growth in seat capacity compared to 2Q16.

“For the remaining quarters of 2017, we remain optimistic as we continue to observe strong demand across most sectors coupled with a stable fuel price and foreign-exchange environment,” AirAsia said.