Saturday, October 18, 2008

Air Asia Now Remains TIGHT-LIPPED On It's Privatisation Plan Details!

Blogged the other day: Did Tune Air Said It Was Thinking Of Making a GO for Air Asia?

Today's Business Times published the following article
AirAsia tight-lipped on privatisation

  • BUDGET airline, AirAsia Bhd, remains tight-lipped on its privatisation plan details.

    “It (privatisation) is in the process. We are working on it, we are looking at the options,” said its chairman Datuk Aziz Bakar, declining to reveal the reasons as to why AirAsia is being taken private.

    A lot of factors were taken into account before the decision was made to privatise the low-cost carrier, including the current volatile financial market, he said when met at Sime Darbys Hari Raya open house.

    “Hence, we can’t pin down the timeframe (by when it will be done),” Aziz said.

    Asked whether AirAsia will be listed on other bourses after privatisation, he said: “We have not gone that far yet.”

    Early this month, AirAsias major shareholder, Tune Air Sdn Bhd,
    said it may take the airline private at an indicative price of RM1.35 per share.

    Tune Air told Bursa Malaysia in reply to a query on Thursday it was one of the options the company was developing to optimise and expand the airline’s operations.

    The company, however, said the price was subject to change, depending on the market conditions at the point of decision.

    “It must be emphasised that this option is subject to availability of financing on acceptable terms from financial institutions and other potential investors in these challenging times as well as conducive market and industry conditions,” Tune Air told Bursa Malaysia. — Bernama

My comments?

I think what has happened is totally unacceptable. No concrete plans have been drawn and what's incredible is that Tune Air understands that currently the AVAILABILITY OF FINANCING is such a massive issue and since they understand, why the need to shoot out lout the privatisation price of rm 1.35 earlier? And now it has NO comments? Huh?

Again I would like to reproduce the remarks I made the other day, Did Tune Air Said It Was Thinking Of Making a GO for Air Asia?

  • Well said Errol! It's sure is baffling!!!!!!!!!!!

    Do investors and minority shareholders benefit from being told the price, considering that it is a moving target and that it is possible that the exercise may not materialise? In fact, it may even lead to investment losses if Tune Air’s plans change.

    I fully agree with what Errol is saying here.

    Well isn't this basically a deal where the left hand (Tune Air) says it was thinking of a plan to take right hand (Air Asia) private!!!!!!!!!!! (Both Air Asia and Tune Air have the same bosses!)

    Well... I can think of so many things in my life and I am sure that the janitor downstairs also can. However, most of the time we don't mumble out extremely loud of what we think of.

    From a simple business perspective, surely from a Tune Air perspective, there has to be monetary benefit from taking Air Asia private, yes?

    Think of it.. if no money can be made from this exercise, why bother then?

    Which sane people would want to embark on a corporate exercise that has ZERO monetary value, right?


    So if Tune Air sees monetary benefit from this GO exercise, why bother with SHOUTING OUT LOUD the GO price? Why? Why? Why?

    Does it make any sense?

    And with such an exercise, surely many would accuse Air Asia of trying to create an artificial price support for the stock. By naming out the price, aren't they telling in an indirect manner not to thrown this stock, especially so in a plunging global market?

    And is Air Asia even worth 1.35? Is it?

    Look at their balance sheet.

    It has a cash balance of 1.084 Billion but its total debt stands at 5.397 Billion!

    And worse still as stated in Air Asia last reported quarterly earnings..

    The entire borrowings are denominated in US Dollar and Euro. The Company has substantially hedged its foreign exchange exposure through formal foreign exchange contracts

    And what's wrong with loans denominated mainly in USD? Well the USD is appreciating against the RM. Which will mean more forex losses for Air Asia. ( For its last reported earnings, Air Asia reported that it lost 76.885 million in forex losses!)

    And what's even more mind boggling is that Air Asia has capital commitment of 25.848 Billion to purchase new air crafts!!!!

    And how much did Tune Air said GO price was?

    Yeah.. thinking about it.

    Well.. I can think of so many things.. and I am so very sure that you also can!

    And what do you think of..

    It’s also a time for Bursa Malaysia to send out the message that such moves should not be marred by careless statements that may hurt investors.