AirAsia Group Berhad sells Merah Aviation in US$768 million transaction with Castlelake

The disposal of AirAsia Group Berhad’s Merah Aviation Asset Holding Limited to AS Air Lease Holdings 5T DAC, an entity indirectly controlled by Castlelake LP in a deal valued at US$768.0 million represents AirAsia Group Berhad's on-going strategy to focus on its core airline operating business as well as its digital initiatives.

SEPANG, 24 December 2018 - AirAsia Group Berhad (AAGB), Asia’s leading low-cost carrier has, via Asia Aviation Capital Limited (AACL), its indirect wholly-owned subsidiary, entered into agreements to sell Merah Aviation Asset Holding Limited (Merah Aviation), which will comprise 25 existing aircraft to be leased to AirAsia Berhad, to AS Air Lease Holdings 5T DAC, an entity indirectly controlled by Castlelake LP (Castlelake) in a deal valued at US$768 million. Castlelake is a US-based global private investment firm and an experienced leader in aircraft ownership and servicing.

In addition to the sale of shares of Merah Aviation, Castlelake will also purchase from AACL a total of 4 new aircraft to be delivered in 2019.

The 25 existing aircraft (A320-200ceo and A320neo) under Merah Aviation, as well as the 4 new aircraft to be delivered (A320-200ceo), will be leased back to AirAsia Berhad and/or its affiliates.

The transaction is subject to the approval of AAGB’s shareholders and other relevant customary closing conditions, and is expected to be completed in the second quarter of 2019.

Commenting on the transaction, AirAsia Group CEO Tony Fernandes said, “This transaction is part of AirAsia’s ongoing transformation into something more than an airline. As we move towards becoming a travel technology company, the disposal of these aircraft will not only unlock significant value but also bring us closer to our goal of being a truly digital company. Years ago, many analysts criticised us for having high gearing and owning assets. Now many understand why we did that. In a few years, our digital strategy will be understood as well.”

“Castlelake is pleased to support AirAsia as it pursues its strategic goals by offering full-service leasing and capital solutions,” said Evan Carruthers, Managing Partner at Castlelake.

Castlelake specializes in providing creative, flexible capital solutions for its airline partners. Since its inception in 2005, Castlelake has invested in and managed more than 500 aircraft on behalf of its funds. With the closing of this transaction, Castlelake’s current fleet will comprise more than 250 aircraft.

BNP Paribas is acting as financial advisor to AAGB while Stephenson Harwood LLP and Tay & Partners are acting as legal counsels to AAGB. Castlelake retained Vedder Price PC as legal counsel.

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About Castlelake

Castlelake, L.P. is a global private investment firm focused on investments in alternative assets, sub-performing notes and special situations, and is an experienced leader in aircraft ownership and servicing. With offices in Minneapolis, London, Dublin and Singapore, the Castlelake team comprises more than 150 professionals. As of September 30, 2018, Castlelake manages private funds and debt vehicles with approximately $13 billion in assets, on behalf of its investors, including endowments, foundations, public and private pension plans, private funds, family offices, insurance companies and sovereign wealth funds. For more information, please visit www.castlelake.com.