Malaysian low-cost airline AirAsia has raised USD 443 million in a dual-tranche financing to refurbish planes that were grounded during the pandemic and refinance its lease liabilities, parent company Capital A said on Thursday. Shares of Capital A were 4.6 per cent higher as of 1049 GMT. Bloomberg News reported the financing earlier in the day.
Global investment manager Ares Management and Singapore-headquartered Indies Capital Partners have issued a USD 200 million tranche, while some aircraft lessors have offered USD 243 million to AirAsia. The airline said it would use about USD 200 million to reactivate grounded aircraft, and the rest to refinance its lease liabilities and strengthen its balance sheet. The financing is structured as privately placed bonds linked to revenue.
Alaska Air is close to finalizing its USD 1 billion acquisition of Hawaiian Airlines, after the US Department of Justice opted not to contest the deal. Both airlines’ brands will be preserved, and the merger is expected to create a stronger competitor in the market. The deal is pending Department of Transportation approval.
The deal highlights the rise of private credit funding in Asia as a rival to traditional banks and other financial institutions by offering floating and higher rates of return. The private credit industry has played a crucial role in helping out several indebted companies of late, a trend that has impressed analysts. In late July, Hong Kong-based property developer New World Development secured two onshore loans worth 1.4 billion yuan ( USD 196.14 million), while Chinese developer Logan Group signed a HK USD 8.2 billion ( USD 1.05 billion) loan last week. AirAsia is not new to the private credit space. The carrier’s maintenance and engineering affiliate had raised USD 100 million from OCP Asia in April 2023.
Evercore Asia (Singapore) Pte. Ltd. acted as the exclusive financial advisor to Capital A on the financing deal for AirAsia.
