Airasia… dated Jan 2013

Shareholders could receive a special dividend, even though the low cost carrier has placed a firm order for 100 new aircraft.

It purchased 24 planes in 2012 but it still had free cash flow of over rm300 million them – thanks to the listing of its two associates in Thailand and Indonesia. After their IPOs. The associates will now (Jan 2013) buy their own planes and carry the assets in their own books and not in Airasia’s, unlike in the past.

While the special dividend still needs to be approved, it is likely to pay out a larger portion of its net profit.

The biggest beneficiaries of the dividend payput would be its largest shareholder – Tune Air Sdn Bhd (which has a 25.49% stake), Wellington Management Co (11.31%) and the EPF with 7.61%.

The budget carrier’s move to pay a generous dividend is a departure from the norm in the lowest carrier segment, where companies normally keep their cash expansion. However the group has been making steady profits and this is in a good position to reward its shareholders.

As at Sept 30, 2012 it had net gearing ratio of slightly over one based on its total borrowings of rm7.81 billion, shareholders’ funds of rm5.5 billion and cash of rm2.2 billion.

What may comfort investors is that by 2017, most of Airasia’s orders would be fully paid for, giving it the option to sell or even lease out its fleet of older aircraft.