Huh? AirAsia Buyout Still An Option?????

Just posted on BusinessTimes or rather from Bloomberg news: AirAsia says buyout still an option

• AIRASIA Bhd, Southeast Asia's biggest discount airline, said a takeover by the carrier's largest shareholder is among several alternatives being considered after the Edge reported a buyout had been scrapped.
  
  ``It's still an option that's there, as are other options,'' chief executive officer Datuk Seri Tony Fernandes, who owns about 20 per cent of AirAsia, said in an interview with Bloomberg Television today in Kuala Lumpur. He said any bid had always been ``subject to market conditions.''
  
  Fernandes and AirAsia's other major shareholders in October said they may buy the airline as its stock dropped toward its original listing price of 2004. While Malaysian Airline System Bhd and Singapore Airlines Ltd are cutting routes, AirAsia is expanding and buying more aircraft, raising concerns it's adding too much capacity amid a global recession.
  
  ``Airlines are a risky business,'' said Damien Horth, an analyst at UBS AG in Hong Kong. ``It seems strange to be attempting a leveraged buyout, which adds further risk.'' He has a ``sell'' rating on AirAsia stock.
  
  AirAsia on October 7 said Tune Air Sdn Bhd, its major shareholder, may buy all AirAsia shares and de-list the carrier. Tune Air, whose shareholders include Fernandes, owns about 31 per cent of AirAsia, according to Bloomberg data. The ``indicative'' price for a buyout was RM1.35 a share, AirAsia said at the time.
  
  The shares today dropped as much as 6.7 per cent to 90 sen and traded at 91 sen at 11:02 am in Kuala Lumpur, valuing the Sepang, Malaysia-based carrier at RM2.16 billion (US$593 million).
  
  `Record Quarter'
  
  Fernandes said there's no sign demand is waning in the economic slowdown. The carrier as of October 31 had taken delivery of 52 of the 175 single-aisle aircraft it's ordered from Airbus SAS. Fernandes started the airline in 2001 with two airplanes.
  
  ``We will have a record fourth quarter,'' he said, without saying by which measure. ``We're not seeing any downturn in passenger numbers. People still want to travel.''
  
  January bookings are ``very strong'' and those for February ``look good,'' he said.
  
  AirAsia last week reported its first loss since becoming publicly traded due to charges related to foreign-exchange fluctuations and fuel hedging.
  
  The RM465.5 million loss in the three months to September 30 compared with a profit of RM180 million a year earlier. Sales in the period rose 43 per cent to RM658.5 million. - Bloomberg

Eh? Still an option?

Come on... who are we kidding?

Look at the chain of events.

Back in Oct, TuneAir made the incredible announcement suggesting that they might make a GO for AirAsia at 1.35.

See posting Did Tune Air Said It Was Thinking Of Making a GO for Air Asia?. Look at the comments made by Mr. Erral Oh on Star Bizweek.

Comments aside, what I felt strongly that Tune Air and AirAsia by their transparency and bold announcement of the GO price had created a support for AirAsia stock price. In a weak stock market environment, the announcement of the GO price forced market to rethink AirAsia and its share price.

The stock DID not fall and held on steadily.

A month later, AirAsia reported their incredibly weak earnings report and in that quarterly earnings report, it showed how highly leveraged it was, its incredible long term commitments and a very stretched balance sheet.

So let's now imagine what if the GO and the GO price was not boldly announced... how do you reckon the stock would have fared?

And today... AirAsia still insist that the GO is an option???

Well AirAsia is now 91 sen.

How much does AirAsia wants to offer?

Here's a report I got from a friend.