Published On: Wed, Oct 7th, 2015

Air Asia announcement pushes airline stock to record level

A330-900neo_RR-Air-AsiaXShares of AirAsia Bhd rose to their highest in nearly two weeks after Reuters reported that the founders of Asia’s largest budget airline are sounding out investors to take the company private.

The stock rose as much as 8 percent in early trade to hit 1.35 ringgit per share, its highest since Sept 25, and outperforming the 0.05 percent rise in the benchmark index .KLSE.

Reuters had exclusively reported on Tuesday that AirAsia’s co-founder Tony Fernandes is talking to banks to secure financing for the transaction, which could be launched over the next few months.

An AirAsia spokeswoman declined to comment.

The airline’s stock had hit seven-year lows after investors were spooked by a research report that in June questioned AirAsia’s accounts. Before the Reuters report, the stock had closed at 1.25 ringgit on Tuesday, the exact price the shares were sold to institutional investors in an initial public offering more than a decade ago.

Some analysts, however, were skeptical that a management-led buyout would resolve indebted AirAsia’s troubles. Like Southeast Asian peers, the airline is battling intense competition on routes, and has a net debt of $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 U.S. dollars.