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August 5, 2016

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AirAsia to sell most of jet leasing unit

AIRASIA Bhd, Asia’s biggest budget airline, will kick off the sale of a majority stake in its plane leasing unit this month, a deal that could value the business at about US$1 billion, people familiar with the matter said.

The Malaysia-based carrier, headed by tycoon Tony Fernandes, has hired three investment banks to run the sale of the Asia Aviation Capital stake, the people said. They declined to be identified as the discussions were confidential.

The deal would help AirAsia boost its finances and slash debt after it faced criticism last year for its accounting practices.

At an overall valuation of US$1 billion, the sale would be significant for a carrier with a market capitalization of US$2 billion.

AirAsia declined to comment.

The airline plans to tap potential suitors including the leasing units of China’s HNA Group, China Merchants Bank, and the aviation leasing company backed by Hong Kong billionaire Li Ka-shing for the sale, the people familiar with the matter said.

AirAsia was also open to selling the unit completely, they said, and its final valuation could change depending on how talks with potential buyers proceed. The people said the carrier is considering paying down debt or paying a special dividend from the proceeds.

They said AirAsia expects to complete it by early next year.


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