Air Asia seeks investors to privatize company

Air Asia has yet to rebound from the financial pressure it has been placed under since the release of a damning financial report by Hong Kong-based analysts GMT Research in June this year. The report questioned the accounting practices, profit outlook, cash flow and structure of Asia’s largest low-cost airline based on fleet size. The result of the publication of the report saw the share value of the airline plummet, eventually settling at a reduction of approximately 27% in value, or MYR1.58 billion (US$420 million).
Air Asia had also suffered a major setback in December 2014 with the crash of flight QZ8501 which killed all 162 aboard. While analysts had confidence in AirAsia’s ability to put the crash behind it as well as responding to intensifying industry competition, they noted that continued losses at the carrier’s Philippine and Indonesian units remained a concern.
Today the value of the airline has fallen by 40% from its pre-report price, valuing the company at MYR3.51 billion (USD$803 million). As a consequence AirAsia boss Tony Fernandes and his long-time business partner, Kamarudin Meranun, are negotiating with banks to secure financing for the company’s privatization, which could take place within the next few months according to Reuters. Fernandes, who bought the original two-plane operation in 2002 for US$1 has fervently defended the company’s financial outlook, making it clear he felt the market was undervaluing it. Tune Air, which is jointly owned by Fernandes and Meranun, owns roughly 19% of AirAsia.