AirAsia India to lease out aircrafts for $45 mn

AirAsia Berhad currently leases aircraft to other joint venture airlines within AirAsia Group

AirAsia Berhad has announced that it commenced a leasing arrangement in relation to an A320-200 aircraft to be operated by AirAsia (India) Private Limited (AirAsia India). The company said, AirAsia India will pay a total consideration of $45 million for the term of the Agreement.

In an announcement from AirAsia Berhad, the company has said that it has commenced the leasing agreement on September 5, 2014, to be operated by AirAsia (India) Pvt Ltd, for a total consideration of $45 million for the term of the Agreement.

In July this year the Airline said that company would have five more planes in total before end of 2014.

The Friday's statement said, "the consideration is in the form of monthly lease payments payable in advance by AirAsia India". The term of the agreement shall be for 144 months and AirAsia India shall pay a security deposit in the form of cash or a letter of credit.

It added that the company currently leases aircraft to the other joint venture airlines within the AirAsia Group in its ordinary course of business. In line with AirAsia's growth strategies, the fleet expansion of AirAsia India would help to maximise route opportunities in the South Asia.

"The growth of AirAsia India would provide the following benefits to the Company and the AirAsia Group - extended leverage on AirAsia brand and distribution presence, strengthen the AirAsia Group commercial and operational economies of scale and the ability to feed traffic between South East Asia and AirAsia India domestic network and vice versa".

AirAsia India, a joint venture company incorporated and operating in India providing low cost carrier services, with the Company holding 49% (through the Company's wholly-owned subsidiary AirAsia Investment Limited), Tata Sons Limited holding 30% and Telestra Tradeplace Pvt. Ltd. Holding 21% in its paid-up share capital.

Amit Bhatia, an Independent Non-Executive Director of the Company, is the son of Arun Bhatia, who holds an indirect stake in AirAsia India via his 99% owned company Telestra Tradeplace Pvt. Ltd., which owns 21% of AirAsia India

The company currently leases aircraft to the other joint venture airlines within the AirAsia Group in its ordinary course of business. In line with AirAsia's growth strategies, the fleet expansion of AirAsia India would help to maximise route opportunities in the South Asia. The growth of AirAsia India would provide the following benefits to the Company and the AirAsia Group.

Extended leverage on AirAsia brand and distribution presence, strengthen the AirAsia Group commercial and operational economies of scale and ability to feed traffic between South East Asia and AirAsia India domestic network and vice versa.