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Malaysia-based low cost carrier Air Asia plans to raise about $120 million by selling six aircraft in 2014, the proceedings from which will be used for further purchases of aircraft, Air Asia Group CEO, Tony Fernandes, told analysts at a conference call on Wednesday evening.
“We are beginning to start to sell our planes which will generate significant cash which will be used for future purchases,” Fernandes said.
The airline, which is looking to sell off the ageing aircraft from its fleet, as 'ongoing yearly process', is currently looking to sell aircraft which are about 9-10 years old.
AirAsia currently has 138 aircraft (A320s) and plans to expand its fleet size to 170 in the coming years. It has ordered for a further 335 aircraft.
“Our first Neo (fuel efficient Airbus aircraft) comes in 2016 and if you look at our asset disposal, which we will share more information in the next month or so, you will see that on average we could raise up to $200 million per year (from aircraft sales), which will be used to offset the purchases of the Neo,” Fernandes said.
“The focus for me is improving margins, reducing cost, growing ancillary income which result in more cash. My focus this year is to really grow cash and we are looking at free cash of MYR (Malaysian Ringgit) 900 million (Rs 1700 crore) for 2014,” he added.
The airline will however not sell any planes in 2015 as it has only 17 aircraft deliveries coming it during the year.
"Sorry, 2015, sorry, I am looking 2016. They'll be zero because, we only have 17 planes coming in,” Fernandes said.
"We will sell 6 more planes in 2016 when the first of the Airbus Neos are delivered,” he added.
However, the airline -- which is looking to start its operations in India -- plans to deploy 6 aircraft for its Indian operations from its current fleet.
He also said that there is a lot of interest coming from different quarters to buy the airlines ageing aircraft which could also force the airline to sell more aircraft.
"We have enormous response to our aircraft, a lot of people want to buy those six aircraft So in fact if worst comes to worst, we can sell 10 or 12 aircraft,” Fernandes added.