AirAsia not an asset light company forever, says Fernandes

by SHAZNI ONG/TMR PIC

AirAsia Group Bhd has refuted claims that the low-cost carrier would become a light-asset airline, insisting that the move would be temporary in facing current market situation.

Its group CEO Tan Sri Tony Fernandes said the airline was only responding to reduce its earnings volatility.

“We are asset light at the moment. It does not mean we are asset light forever. I think there is a miscommunication.

“Right now, when I started buying planes, people criticised us for owning aircraft. But I did it because it was much cheaper to own planes than to lease planes,” he told reporters after the launching ceremony of Malaysia’s first plane spotter in Sepang, earlier today.

It was recently reported that the airline company is moving from the traditional model of owning aircraft to become an asset-light airline.

The Star reported the company plans to fully shift to the new model by completely withdrawing from aircraft ownership, a move that would bring the obvious benefit of lowering its financial liabilities.

Fernandes noted that it is much cheaper to lease planes than to buy planes in the current market.

“People think that we are asset light because I want to grow and become a digital company, (this is) not the case.

“We are asset light only because the market makes it feasible to lease planes cheaper than owning planes. We have ‘virtually’ disposed of all of our aircraft, except for Thailand,” he said.

“We are only responding to the market situation. In terms of we are at now have made a change to the CEO to NEO (aircraft). So selling our aircraft was a very good way of getting rid of residual risk,” he explained.

“While we are asset light now that, that does not mean it will be light asset forever. And if interest rates change, then we will start buying aircraft again.

“But fundamentally on the journey, to lessen the volatility of our earnings, and I hope in years to come, our digital business would contribute with our ancillary business would contribute about 70% of our earnings and 30% (respectively),” he said.

He further said that many people were skeptical when he said that ancillary revenue makes 25% of the group’s revenue.

“Now we do have 25% in revenue. So for me in terms of profitability, I aim for our digital businesses to contribute 70% of our earnings,” he said.

Earlier, Fernandes was present at the launching ceremony of Malaysia’s first outdoor plane observation deck at Kuala Lumpur International Airport.

The deck, named “Anjung Spotter”, is located at Jalan Pekeliling next to Runway 32 Left (32L), and can accommodate 40 people at any one time, with the public will be able to enjoy and capture panoramic moments of various aircraft taking off and landing from a strategic location.