AirAsia 'plans HK listing, joint venture in China'

AirAsia is poised to order as many as 100 new jetliners from Airbus as part of its plans to become a pan-Asian giant. The low-cost carrier's share price fell sharply last year but has rebounded strongly since then.
AirAsia is poised to order as many as 100 new jetliners from Airbus as part of its plans to become a pan-Asian giant. The low-cost carrier's share price fell sharply last year but has rebounded strongly since then. PHOTO: EUROPEAN PRESSPHOTO AGENCY

FARNBOROUGH • AirAsia is studying a dual listing in Hong Kong, part of plans to become a pan-Asian low-cost airline player as it also moves towards setting up a joint venture in China, people familiar with the matter said on Sunday.

The Malaysia-based group is simultaneously looking for more aircraft to meet strong demand in North Asia and elsewhere, the people said on the eve of Britain's Farnborough Airshow which commenced yesterday.

It is poised to order as many as 100 jetliners from Airbus. The purchase will likely comprise A321neo narrow-body aircraft, which have a list price of US$125.7 million (S$169.4 million) each.

AirAsia, Asia's largest low-cost airline group with affiliates across South-east Asia, aims to form the joint venture with the backing of a Chinese state-owned enterprise to help capture traffic from fast-growing secondary and tertiary cities.

Co-founder and chief executive Tony Fernandes referred to the potential dual listing without naming a location and hinted at a potential new aircraft order in remarks posted on his Twitter account.

"Looking at more ancillary (revenues), more capacity and dual listing," he said.

The airline group is talking to Chinese banks and potential shareholders, including China Everbright Bank, one source said.

Expansion into the world's fastest-growing aviation market comes as China edges towards overtaking mature Western air travel markets despite recent slowing economic growth.

It also comes as AirAsia rebounds from recent turbulence due to lower oil prices and as Mr Fernandes and his partner put in additional investment and take greater control of the business.

AirAsia's share price fell sharply last year amid negative reports about its finances, but has rallied strongly since then.

A Hong Kong listing could help to raise the company's profile, coming on the heels of the flotation there of aviation lessor BOC Aviation, and allow AirAsia to raise new capital.

Reporting a near six-fold jump in quarterly profit in May, Mr Fernandes said demand from Chinese travellers had recovered.

The airline also sees broad demand in markets like South Korea and Japan and has said it is bullish on India after the country eased regulations on the growth of young airlines.

Mr Fernandes has signalled he aims to make AirAsia a low-cost giant with one-stop connections mainly from its Malaysian base.

"It is a huge business opportunity - use low-cost to build another Dubai," a person involved in the plans said, referring to the leading Middle East transport hub.

China contributes nearly 40 per cent of the group's revenues, but Mr Fernandes said that there "is still a lot to do in North Asia... an important long-haul market".

AirAsia operates more than 220 flights daily to and from Kuala Lumpur, connecting to over 100 destinations in 24 countries.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 12, 2016, with the headline 'AirAsia 'plans HK listing, joint venture in China''. Print Edition | Subscribe