- AirAsia in funding talks
By Presenna NambiarPublished: 2009/01/09
The airline is exploring financing options in the event that it has to be the party developing the RM1.6 billion low cost carrier terminal in Labu
AIRASIA Bhd is in talks with infrastructure funds and bankers on the funding needed to develop the RM1.6 billion airport in Labu, Negri Sembilan.
"Sime Darby Bhd has not finalised whether they will be an equity holder, developer or just outright sell the land to us. So, on our side, we have to be prepared for any eventuality," AirAsia Bhd deputy chief executive officer Datuk Kamaruddin Meranun told reporters in Sepang yesterday.
AirAsia said the group was prepared to own the airport, but preferred to be just an operator.
The airport, to be built on 1,200ha, is to be completed by March 2011.
"So, in the event that Sime Darby says we have to develop it ourselves, we have already started talking to some infrastructure funds and bankers. We are not concerned about financing," Kamaruddin said.
Yesterday, AirAsia held a briefing and tour of the proposed site for the new airport in an effort to stem a public outcry against the project.
Sime Darby officials are expected to speak to the media about the project next week.
AirAsia chief executive officer Datuk Seri Tony Fernandes has dubbed the low cost carrier terminal (LCCT) to be built in Labu as "Terminal Rakyat".
"We want the public to understand what we are trying to do and that we are trying to do something good for the country," Fernandes said.
KLIA East is to be connected to two rail links, via Keretapi Tanah Melayu and Express Rail Link, at a cost of RM20 million.
Details on which party will finance the links have not been finalised.
On why AirAsia needed its own airport when Malaysia Airports Holdings Bhd (MAHB) had already made known plans of building a permanent LCCT with a capacity of 30 million passengers, Fernandes said he did not think that it would be feasible for MAHB to build the terminal, considering the delays which had occurred during the expansion of the existing LCCT.
According to Fernandes, the expanded LCCT was supposed to be ready by September 2007. It is still undergoing work and will be completed by March this year.
"The last time I spoke to MAHB, they told me they could only build me a permanent LCCT by 2014 at a site opposite the main terminal now. That made us very, very nervous," he said.
Consequently, the airline began looking for an alternative, Fernandes said.
"The key thing is, we cannot slow down our growth; we have planes coming in. For AirAsia X alone, there will be six planes by the end of 2009," he said.
MAHB, in a press statement last Monday, had said that AirAsia had been consulted on the development of its National Airport Master Plan, which includes the proposed permanent LCCT.
Fernandes said that he was open to MAHB having an interest in the Labu airport.
I really wonder if there is absolutely no cost in one's funding.
Take a look at this posting: AirAsia Posted Massive Losses!
I will just take out some important facts.
1. Cash balances is now only 774 million compared to 1.084 billion in its previous quarterly earnings!
2. In its previous quarter, I thought AirAsia borrowings were extremely high at 5.397 billion.
AirAsia total debts is now 6.352 billion!!!!!
Now if you reckon that is bad, what about AirAsia's capital commitments? Have a look at the following screen shot. (source of data: Quarterly rpt on consolidated results for the financial period ended 30/9/2008 )
AA still has capital commitment totalling a whopping 24.1 billion!
So let's summarise. AA on its last quarterly earnings said that it has Cash balances of 774 million, total debts of 6.352 billion and a capital commitment of 24.1 billion.
And it now wants to seek funding to be part of the developing party to develop a LCT terminal worth rm 1.6 billion?
Is money really that cheap that one can borrow and borrow and borrow??????
Can one really borrow, borrow and borrow like there is no tomorrow?
Doesn't summer eventually turn into fall and fall eventually turns into winter?
Capital borrowing by airlines is definitely not a logical process. You don't need to single out AirAsia, its an industry wide phenomenon that has lasted for years. If airlines don't address their long term debt issues, they will likely always be struggling companies. Some info on airline capital improvements in these though times:
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