AirAsia revives plan to buy private jet for US$10mil

AirAsia has revived its earlier plan to buy the private jet used by its group chief executive officer Tan Sri Tony Fernandes and executive chairman Datuk Kamarudin Meranun, entering another sale and purchase agreement similar to the one inked in June last year.

In a filing with Bursa Malaysia, the low-cost carrier said it had signed a deal on Thursday to buy the Bombardier BD-700-1A10 Global Express aircraft from charter provider Caterhamjet Global Ltd (CJG) for the similar cash consideration of US$10mil (RM44.4mil).

CJG is ultimately owned by Fernandes and Kamarudin, who are both also AirAsia shareholders with a 32.2% stake each. CJG had bought the aircraft, which was manufactured in 1997, for US$24mil in July 2012 and refurbished it for US$0.7mil the following year.

In June last year, AirAsia sealed an agreement to acquire the jet but that initial deal was not completed by mutual agreement of the parties. The latest announcement did not elaborate on the decision.

AirAsia has a charter agreement with CJG, signed in April 2015, for the use of the aircraft as well as for maintenance support until June 30, 2017.

The annual fee charged by CJG was US$3mil (RM13.3mil) plus the goods and services tax. On March 31, 2016, the AirAsia board approved CJG’s request to increase the annual fee from US$3mil to US$5.75mil (RM25.5mil) due to the rising operating costs of the aircraft.

In its latest announcement, AirAsia said CJG was planning to sell the aircraft, which meant that unless AirAsia bought the jet, its group CEO and executive chairman would no longer be able to benefit from the convenience and efficient transport provided by the aircraft when travelling to AirAsia’s associates for work.

The acquisition, the statement continued, would be novated to a soon-to-be-formed fully-owned subsidiary of AirAsia, which would act as the registered owner of the aircraft.

AirAsia said operating the aircraft under its subsidiary would allow the subsidiary to have the option of either operating it under a private category or of signing a charter agreement with an approved aircraft operating certificate (AOC) holder without being constrained by the regulatory considerations of the commercial AOC of AirAsia.

“The subsidiary is contemplating to apply for a charter AOC from the Department of Civil Aviation Malaysia to operate as a full-fledged charter and private unscheduled business jet operator,” it said.