AirAsia Shares Up On Report It May Be Taken Private

October 7, 2015

AirAsia shares rose to their highest level in nearly two weeks after a report that its founders are sounding out investors to take the company private.

The stock closed 5.6 percent up at MYR1.32 ringgit per share, after briefly hitting MYR1.35 earlier in the day.

Some analysts doubt that a management-led buyout would resolve indebted AirAsia's troubles. Like Southeast Asian peers, the airline is battling intense competition and has a net debt of USD$2.4 billion as of June this year.

Its revenues are also largely in Malaysian ringgit, which has lost 20 percent this year, while costs are mostly in US dollars.

"Despite the positive traffic numbers, many carriers are struggling regionally. Malaysian carriers, specifically, are reeling from the deteriorating ringgit and intense competition," said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics.

Yusof said there was talk about taking the airline private during the 2008 financial crisis, but funding was an issue.

"I suspect it's going to be harder now as AirAsia has grown into a bigger beast," he added.

Last year, Malaysia's government took state-run carrier Malaysia Airlines private after investors dumped the stock following two air disasters.

(Reuters)