Airasia ... Oct 08

Sources say privatization of Airasia is set t o happen. It is learnt that the major shareholders have been deliberating the privatization proposal for some time now, and felt that the market would continue to undervalue the stock as long as the company is on an expansion drive. Hence, they felt that privatization was the best solution to extract value from Airasia and chart its progress as it expands its fleet size.

Its controlling shareholder is Tune Air Sdn Bhd, which controlled 30.7% shares of the company as at end March 2008. Tune Air’s shareholders are Datuk Fernandes, who is the CEO, and Datuk Kamurudin Meranun, the deputy CEO and executive director of Airasia.

The other substantial shareholder of Airasia is the EPF, which has accumulated 7.7% shares, after emerging as a substantial shareholder in Jan 2008.

It is not clear if Fernandes and Kamarudin will work with the EPF, or attempt the privatization on their own.

Certain quarters also say Fernandes and his associates have already lined up investors from the region to take up stakes and hold these for a longer term if they are successful in their privatization plans.

The privatization is similar to many other such exercises whereby the major shareholders pay full value for the company and take it private if they feel that the market does not appreciate the stock.

Based on its net asset per share, Airasia is worth rm2.3 billion with a spread of about 2.4 billion shares.

Fuel cost makes up some 50% of total operating cost.

Airasia also holds 16% via redeemable preference shares in Airasia X, which operates budget long haul flights.