CAPA: AirAsia is ripe for investors

AirAsia’s announcement of a long-haul expansion strategy at a time when its short-haul operation is undergoing rapid growth requiring significant investment is an “inspired” strategy, according to a new report from the Centre for Asia Pacific Aviation.The report, published today, argues that AirAsia is “probably not extending itself too far financially. It could simply be making itself so attractive to potential investors in this phase of market development that it will drive up its potential value for investors.”

The Centre’s Executive Chairman, Peter Harbison, stated, “the Asian market is a fertile breeding ground for investor opportunities, with equal doses of liberalisation and new travellers opening up massive traffic expansion opportunities. AirAsia has the attractions of a large and expanding market share, the lowest airline costs in the world, a brand name to die for - and unquestionable recent profitability.”

The report suggests there is a likelihood that strategists in several investment groups would be looking at how a deal involving AirAsia could be structured.

“If there’s one thing that the TPG/Macquarie/Allco bid for Qantas has done, it is to make it clear that airlines in this region are in play for the equity investors. The equity hounds are baying and the whole jungle is listening,” said Mr Harbison.

According to the report, AirAsia X is to be a separate company with its own management - a perfect vehicle for investors.

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“So there is at least one more shoe to drop. Who will be making the investment in the second Malaysian flag carrier? And how long will it be before further “strategic” moves are made on AirAsia itself? An eventual IPO of AirAsia X is one option, but watch this space,” added Mr Harbison.
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