It's A 20% Placement For AirAsia!

Oh my!

Big talk from AirAsia yet again!

On the Business Times today.

• AirAsia sees more than RM1b in coffers
  By Jeeva Arulampalam Published: 2009/08/04
  
  Low-cost carrier AirAsia Bhd (5099) expects to have more than RM1 billion in its coffers by the end of the year, as it grows its profits and undertakes a private placement, says its chief.

Hmmm... let's see if such big talk is achievable. As per last reported earnings AirAsia only had some 223.991 million in its piggy bank and total loans stood at 6.934 Billion.

• “The cash will be used to lower the group’s gearing,” group chief executive officer Datuk Seri Tony Fernandes told reporters after the airline’s annual and extraordinary general meetings in Sepang yesterday.

Well I do hope that. No company can borrow and borrow forever like how AirAsia did. If I remember correctly AirAsia only had some 95.4 million in loans after listing end 2004. It's now only Aug 2009. Five short years and AirAsia loans had exploded to some insane 6.9 billion.

Now surely Houston that WAS a massive problem!

• In an announcement to Bursa Malaysia yesterday, AirAsia has proposed a private placement of up to 481.14 million new ordinary shares of 10 sen each, which could potentially raise gross proceeds of up to RM601.43 million.
  
  The proceeds are based on an issue price of RM1.25 per placement share, representing a discount of 3.10 per cent to the five-day weighted average market price of AirAsia shares up to and including July 27 of RM1.29.
  
  This will represent up to 20 per cent of the issued and paid-up share capital of AirAsia as at July 27 of RM237.56 million, comprising 2.37 billion shares.

Oh no..... 20% dilution for minority shareholders!!!! Well what else can they expect? If AirAsia do not raise this capital, it's really a sitting duck!

Oh rm1.25 per share.

No wonder AirAsia - the stock - had been flying high lately. :p2

• “Our aim was just to raise some RM500 million to reduce our net gearing.
  
  We have received interest from many local and foreign investors,” said Fernandes. The placement will reduce the airline’s net gearing from 3.71 times to 2.56 times based on its unaudited accounts as at March 31 2009. As much as RM68.76 million of the proceeds will be used to re-pay part of AirAsia’s interest-bearing borrowings.

Waaa.... plan to raise some rm500 million... but.... but... if my understanding of English is not flawed, AirAsia is now saying only rm68.76 million will used to re-pay part of AirAsia's interest-bearing borrowings!

Holy cow!

6.9 Billion minus rm68.76 million still equals many, many, many moolah!

Errr... the inquiry mind wants to know why AirAsia wants to raise so much money then?

Let me guess... lol... pay for new aircrafts is it?

How helpful will this placement be then?

• When asked if the placement will be done in tranches, Fernandes said the group would rather place the 20 per cent altogether upon receiving the necessary regulatory approvals.
  
  The private placement is expected to be completed by the fourth quarter of this year.
  
  Meanwhile, the group’s current cash and cash equivalents as at March 31 2009 stood at RM223.99 million.
  
  On the airline’s overall business, Fernandes said passenger growth was good for its second quarter ended June 30 2009, with a load factor of 76 per cent.
  
  “We do hope to announce a positive second quarter and move towards a profitable full year,” he said.
  
  AirAsia is expected to release its fiscal second-quarter results within the next two weeks.

HOPE to announce a positive second quarter?

• It posted a net profit of RM203.1 million for its first quarter.
  
  Fernandes also said that AirAsia is currently in discussions with Malaysia Airports Holdings Bhd over the outstanding airport taxes owed to the airport operator.

LOL! See how that rm203.1 million is engraved as AirAsia's first quarter total profits. Well we do know that much of it came from extra-ordinary gains!

• “The airport charges should be resolved in the next two to three weeks,” he said.
  Fernandes also denied that AirAsia is eating into Malaysia Airlines’ (MAS) market share.
  
  Rather, it has grown the domestic and regional air travel markets.
  
  “The only way we have grown from 200,000 to 24 million passengers is by offering low fares and developing 44 new routes.
  
  I can’t see how we can cannibalise when we start flying brand new routes not served by MAS,” he said.