Analysts sees AirAsia as being digitally-focused with aircraft sales

KUALA LUMPUR: AirAsia Group Bhd’s purported disposal of 30 narrowbody aircraft to US investment firm Castlelake LP for roughly US$800 million indicates the former’s aspirations to turn from being asset-heavy to being more digitally focused, analysts said.

The potential sale of the older aircraft which are under lease to AirAsia’s affiliated airlines, was positive for the group’s shift to increase digitalisation, MIDF Research said.

The firm pointed that AirAsia Group had partnered with Airbus and Palantir to establish an integrated Big Data platform which included forecast of predictive maintenance and efficient scheduling of parts with a potential saving of US$40,000 per aircraft per year.

Aside from big data efforts, AirAsia Group’s subsidiary, Big Loyalty Sdn Bhd (BL), had acquired shares in Thailand-based Tune Money Co Ltd, PT Tune Money and Think BIG Loyalty Hong Kong Ltd for about RM690,000 in November and December this year.

BL had launched its BIG Xchange points conversion programme in September, which is expected to increase its revenue contribution from credit card points segment by 10 per cent, MIDF Research said.

The potential sale, which was expected to conclude in a few weeks, will lead to net changes in AirAsia Group’s fleet.

“Previously, management noted that there will be a net addition of 24 aircrafts in financial year 2019. Taking into consideration the

sale of 30 aircrafts to Castlelake, there would be a net reduction of AirAsia Group’s fleet by six aircrafts.

As such, we expect aircraft utilisation across AirAsia Group in FY19 to increase above the 2.2 per cent recorded for the nine months of FY18,” MIDF Research said in a report today.

The firm said AirAsia Group’s financial position would not be affected by writ of summons by Malaysia Airports Holdings Bhd.

Assuming that the aircraft sale would be satisfied via cash, AirAsia Group’s cash pile would balloon up to around RM7.77 billion, translating into a net cash position of roughly RM4.57 billion.

“The writ of summons by MAHB to AirAsia Group worth RM9.4 million for the uncollected international passenger service charges from July 2018 is rather small, only less than one per cent of its cash pile and FY18F/FY19F earnings. Therefore, the group’s financial health will not be adversely impacted in the event that it has to reimburse the monies owed to MAHB,” MIDF Research said.

Source: NST