AirAsia said there was no increase in operating leverage, adding the management was confident of bringing net gearing down to around 2.00 times by end of 2015 from 2.47 times now.
It said its cash flow continues to strengthen due to capacity reductions taken last year, improved demand especially with the recovery in Chinese traffic, and a much more rational marketplace in all its territories especially Malaysia.
“During the management’s roadshows and the latest earnings briefing, the management outlined various strategies in detailed, on the active measures the company is doing to manage gearing level.
“This includes (i) to grow cash further through operations, (ii) capacity management, (iii) monetising non-core investments if valuation is right and as mentioned above, through (iv) recovery of debt from Indonesia AirAsia (IAA) and Philippines AirAsia (PAA). Currently, the company’s net gearing level stood at 2.47 times,” it said.
AirAsia reminded long-term shareholders that the company’s net gearing was at 4.2 times a few years back where the shareholders were told that the company would reduce it down to 1.5 times.
“Again the management is confident of bringing net gearing down to around 2.00 times by end of 2015.
“This does not include potential cash of RM1bil of repayment from IAA and PAA, potential additional sale and leaseback transactions, and potential sale of investments (eg. Tune Insurance, AirAsia Expedia etc., which the management has no intention of selling as there are tremendous upside values in these investments),” it said.