AirAsia Founders To Boost Stakes

AirAsia's founders tightened their grip on Asia's biggest budget airline with a deal to invest MYR1 billion ringgit (USD$257 million).

The move to issue shares to Group chief executive Tony Fernandes and chairman Kamarudin Meranun is an attempt to draw a line under market concerns about the company's debt and accounting-related issues that hurt it last year.

The founders will raise their combined stake to 32.4 percent from 18.9 percent, the airline said in a statement.

Last year, AirAsia faced calls to shore up its financing amid tough operating conditions but a decline in fuel costs and the recent strengthening of the Malaysian ringgit has improved the airline's prospects.

The company's shares have rebounded about 42 percent this year after losing about half of their value last year.

Fernandes and Meranun, who founded AirAsia in 2001 with two aircraft, have turned it into Asia's largest budget airline with a fleet of over 160 Airbus jets serving Thailand, Indonesia, Philippines and India.

"AirAsia is more and more about these two individuals now," said Mohsin Aziz, a Kuala Lumpur-based analyst at Maybank. "The business will benefit with this cash injection."

The company said it will spend about one third of the funds to prepay and repay the group's debts, while also using the money to finance aircraft and engines.