Sunday 18 March 2018

AirAsia jet-leasing division lands Irish base in expansion

Asia Aviation Capital is owned by Malaysia-based low-cost carrier AirAsia
Asia Aviation Capital is owned by Malaysia-based low-cost carrier AirAsia
John Mulligan

John Mulligan

Malaysia's Asia Aviation Capital, a $1bn (€854m) vehicle, is the latest international aircraft-leasing company to establish a base in Dublin.

The company, which is owned by Malaysia-based low-cost carrier AirAsia, has been up for sale since 2016 and a transaction for either all or part of the company is expected to be finalised by the end of this year.

It's locating an office in Ireland in order to target aircraft-leasing customers in Europe.

Asia Aviation Capital was established in 2014 to provide fleet solutions to affiliates of AirAsia, the Malaysia-based low-cost carrier that was founded by Tony Fernandes.

He's still group CEO of AirAsia, whose operations stretch across Asia.

Dublin-based businessman Conor McCarthy also helped to establish AirAsia, working closely with Mr Fernandes and taking a small stake in the airline.

Mr McCarthy, a former Ryanair executive, is the founder and chairman of aircraft maintenance firm Dublin Aerospace, in which Mr Fernandes was an original investor.

The Malaysian businessman invested €2m in Dublin Aerospace and sold his 20pc stake last year to Mr McCarthy.

Asia Aviation Capital has a fleet of about 60 jets, and they are primarily leased to AirAsia affiliates.

The company was put on the block last year, with either a partial or full sale being contemplated.

A number of bids were received for the business by early this year, with Chinese suitors among those in the mix.

But Reuters reported in March that privately-owned South Korea firm Korea Transportation Asset Management (KTAM) had emerged as the preferred bidder.

The government-owned Korea Development Bank was lined up to provide financing for a deal, according to Reuters. KTAM was poised to take a majority stake in Asia Aviation Capital, it added. A deal has not yet been cemented, however.

The CEO of Air Asia's Malaysia operation, Aireen Omar, said last month that the sale of a stake in Asia Aviation Capital would be completed by the end of the year.

AirAsia appointed Credit Suisse, BNP Paribas and RHB Investment Bank to handle the sales process.

Read more: We must meet Asian threat to aircraft  leasing lead head on

Ms Omar said that proceeds from the sale could be either distributed to AirAsia shareholders or used to cut AirAsia's debt.

If the Korean firm is successful in acquiring a majority stake in Asia Aviation Management, it will mark the biggest foray yet by a firm in the country into the buoyant international aircraft leasing business, much of which is managed out of Ireland.

China has been aggressively building a presence in the sector, however.

In 2016, Chinese conglomerate HNA finalised the acquisition of Dublin-based Avolon, a leasing company that was co-founded by Domhnal Slattery.

Earlier this year, Avolon paid just over $10bn for the leasing business of US financial group CIT. That catapulted Avolon to being the world's third-largest aircraft lessor.

Mr Fernandes, who also co-owns British football club Queens Park Rangers, has also been eyeing property investments in Ireland.

One of his companies secured permission earlier this year to redevelop the historic Ormond Hotel on Dublin's quays.

He plans to demolish the existing hotel and build a new 121-bedroom property.

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