AirAsia mulls dividend from proceeds of leasing unit sale

AIRASIA Bhd, the region's biggest budget airline, is likely to use most of the proceeds from a proposed sale of its aircraft-leasing arm to pay a dividend, its chief executive officer said in an interview.

The airline expects to get binding bids for the unit by March and close the deal by summer, group CEO Tony Fernandes, 52, said in a Bloomberg Television interview with Francine Lacqua in Davos, Switzerland, while attending the World Economic Forum. The board of the Sepang, Malaysia-based carrier will take the final call on whether to use the proceeds to pare debt or pay a dividend, he said.

"Our gearing is very low anyway but I always like to have more cash than less cash," Mr Fernandes said. "But it's really up to the board to finally decide what to do with that." The divestment of Asia Aviation Capital Ltd may help bolster the financials of the carrier that has ordered hundreds of jets from Airbus SE and had a net debt of 8.8 billion ringgit (S$2.8 billion) at the end of September. A dividend may also cheer investors who were rewarded with a 78 per cent rally in the shares in 2016, the best in six years. The asset had received an offer valued at about US$1 billion, Mr Fernandes had said in May.