AirAsia has chosen to sell the aircraft portfolio of its Asia Aviation Capital unit to entities managed by BBAM in a $1.18 billion deal.
Under the deal, FLY Leasing, Incline B Aviation and Nomura Babcock and Brown will together acquire 84 Airbus A320s and 14 engines from Asia Aviation Capital, with the engines and 79 aircraft to be leased back to AirAsia and its affiliates.
FLY and Incline will also acquire another 48 A320 family aircraft from AirAsia’s orderbook and take an option to acquire a further 50.
FLY will settle part of the deal through the issue of $50 million worth of American Depository Receipts to AirAsia, resulting in the low-cost carrier group taking up a 10.2% stake in the lessor.
The airline adds that it will make a net gain on the disposal of around MYR967 million ($246 million), which will be used to repay bank borrowings. It is expected to close by the third quarter of the year.
“This is a perfect outcome to a strategy we started in 2004 and I’m thrilled at the execution of our long-term vision,” says AirAsia group chief executive Tony Fernandes.
“We have now disposed of most of our physical non-core assets and we are thrilled to be embarking on our new digital strategy which will build a very valuable group of assets.”
Credit Suisse, BNP Paribas and RHB were the joint financial advisors for the deal, while Milbank and ZICO were legal counsel for AirAsia.
The announcement ends a sale process that has dragged on for more than a two years, during which Korea Asset Transport Management and China Everbright had been reported as the leading bidders for the platform.