AirAsia to raise US$120 million by disposing ageing fleet

AirAsia plans to raise about US$120 million (about RM360 million) this year by selling six of its ageing aircraft of 9 to 10-years-old and use the proceeds for future purchases, its group chief executive officer, Tan Sri Tony Fernandes, said.

"We are beginning to start to sell our planes, which will generate significant cash, which will be used for future purchases," The Financial Express reported, quoting him as saying.

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 US$200 million per year (from aircraft sales), which will be used to offset the purchases of the Neo," he had told analysts at a conference in Mumbai.

"The focus for me is improving margins, reducing cost and 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 RM900 million," he said.

The airline will however not sell any planes in 2015 as it has only 17 aircraft deliveries coming it during the year, reported the English daily.

"There will be zero (disposal in 2015) because we only have 17 planes coming in. We will sell six more planes in 2016 when the first of the Airbus Neos are delivered," he said.

Fernandes also said there was a lot of interest coming from different quarters to buy the airline's ageing aircraft, which could result in AirAsia disposing 10 or 12 aircraft instead of six.

The airline, which is looking to start its operations in India, plans to deploy six aircraft for its India operations from its current fleet, the report added.