TravelNewsAsia.com
Fri, 4 Jan 2019

AirAsia Sells Merah Aviation

AirAsia Group Berhad has, via Asia Aviation Capital Limited (AACL), its indirect wholly-owned subsidiary, entered into agreements to sell Merah Aviation Asset Holding Limited, which will comprise 25 existing aircraft to be leased to AirAsia Berhad, to AS Air Lease Holdings 5T DAC, an entity indirectly controlled by Castlelake LP in a deal valued at US$768 million.

In addition to the sale of shares of Merah Aviation, Castlelake will also purchase from AACL a total of 4 new aircraft to be delivered in 2019.

The 25 existing aircraft (A320-200ceo and A320neo) under Merah Aviation, as well as the 4 new aircraft to be delivered (A320-200ceo), will be leased back to AirAsia Berhad and/or its affiliates.

AirAsia Airbus A320 at klia2 in Malaysia. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.

The transaction is subject to the approval of AirAsia’s shareholders and other relevant customary closing conditions, and is expected to be completed in the second quarter of 2019.

AirAsia Group CEO Tony Fernandes said, “This transaction is part of AirAsia’s ongoing transformation into something more than an airline. As we move towards becoming a travel technology company, the disposal of these aircraft will not only unlock significant value but also bring us closer to our goal of being a truly digital company. Years ago, many analysts criticised us for having high gearing and owning assets. Now many understand why we did that. In a few years, our digital strategy will be understood as well.”

Castlelake specializes in providing creative, flexible capital solutions for its airline partners. Since its inception in 2005, Castlelake has invested in and managed more than 500 aircraft on behalf of its funds. With the closing of this transaction, Castlelake’s current fleet will comprise more than 250 aircraft.

“Castlelake is pleased to support AirAsia as it pursues its strategic goals by offering full-service leasing and capital solutions,” said Evan Carruthers, Managing Partner at Castlelake.

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