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AirAsia weighs BNP, Credit Suisse, RHB to help sell leasing unit

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AirAsia is considering hiring BNP Paribas, Credit Suisse Group and RHB Capital to help sell its aircraft leasing unit as part of plans to raise funds and strengthen its finances, the group's Chief Executive Officer Tony Fernandes said.

[KUALA LUMPUR] AirAsia is considering hiring BNP Paribas, Credit Suisse Group and RHB Capital to help sell its aircraft leasing unit as part of plans to raise funds and strengthen its finances, the group's Chief Executive Officer Tony Fernandes said.

Asia's biggest discount carrier also plans to garner between US$75 million and US$100 million from a sale of new shares in its Philippine arm, Mr Fernandes said in an interview in his office in Sepang, near Kuala Lumpur.

Besides the existing shareholders, "three other parties are also interested" in Philippines AirAsia and the carrier will mandate banks for the sale in two or three weeks, he said.

"The Philippine operation is doing well and has strong growth potential," he said.

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A potential deal involving the sale of the leasing unit, Asia Aviation Capital, would once again highlight the popularity of a lucrative industry that has lured billionaires including Li Ka-shing and Cheng Yu-tung. As airlines in Asia- Pacific move to triple their fleet, they're finding it cheaper to lease jets rather than own them, with returns from multiyear contracts exceeding those of airlines.

US$1 BILLION OFFER

In a separate interview last month, Mr Fernandes had said the carrier had received an offer valued at about US$1 billion for the leasing business and the company needed to further discuss it with the board. AirAsia intends to divest the fully-owned unit at some point, he said.

BOC Aviation, the leasing arm of China's fourth- biggest lender by market value, last month raised US$1.1 billion from an initial public offering, attracting investors including Boeing, China Investment Corp, the Silk Road Fund and Oman Investment Fund.

BNP Paribas, Credit Suisse and RHB didn't immediately respond to e-mails seeking comments.

AirAsia, which had total debt of RM10.9 billion (S$3.6 billion) as of March 31, has to pay for five aircraft that it is taking delivery of this year. Fernandes and his business partner Kamarudin Meranun recently subscribed to new shares worth about RM1 billion in the Malaysian carrier.

AMONG BIGGEST

AirAsia, one of the biggest customers of Airbus Group SE's single-aisle A320 jets, set up Asia Aviation Capital in 2014. The carrier operated 171 A320s in its fleet at the end of March.

The group's medium and long-haul budget carrier, AirAsia X, had 29 A330s.

Asia Aviation Capital manages only those group aircraft leased to affiliates outside Malaysia, including Thai AirAsia, PT Indonesia AirAsia and AirAsia India, according to filings in 2014.

Philippines AirAsia is a joint venture between AirAsia and some Filipino investors, according to information published on its website. The unit operates domestic and international flights out of Manila and the beach resort destinations of Cebu and Kalibo.

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