AirAsia to sell old fleet to raise $120 m in 2014

Feb 28 2014, 02:52 IST
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SummaryThe airline, planning to sell ageing aircraft as an ‘ongoing annual process’, is looking at selling aircraft that are about 9-10 years old

alaysia-based low cost carrier AirAsia plans to raise $120 million by selling six aircraft in 2014. The company plans to use the sale proceedings for aircraft purchases, AirAsia Bertha’s Group CEO Tony Fernandes told analysts at a conference call on Wednesday.

“We would start selling our planes which will generate significant cash that can be used for future purchases,” Fernandes said.

The airline, which is planning to sell its ageing aircraft as an ‘ongoing annual process’, is currently looking to sell aircraft that are about 9-10 years old. AirAsia has a fleet of 138 aircraft (A320s) and plans to bring it to 170 in coming years. It has ordered for 335 aircraft.

“Our first fuel efficient aircraft Neo would come in 2016, and if you look at our asset disposal, you will see that on an average, we raise up to $200 million per year from sale of aircraft. This amount is used to make up for the purchases of the Neo,” Fernandes said.

“The focus is to improve margins, reduce cost, grow ancillary income that bring in more cash. My focus this year is to generate cash and we plan to raise MYR (Malaysian Ringgit) 900 million (R1700 crore) in 2014,” he added. The airline will, however, not sell any planes in 2015 as it has only 17 aircraft deliveries in the year.

"We will sell six more planes in 2016 when the first of the Neos are delivered,” he added. However, the airline — which is looking to start its operations in India — plans to deploy six aircraft for its Indian operations from its current fleet.

He also said 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 got good response for our aircraft, a lot of people want to buy those six aircraft,” Fernandes added

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