PIF’S INTEREST IN AIRASIA SIGNALS CONFIDENCE IN GROWTH, AIRASIA REMAINS TIGHT-LIPPED

By Kisho Kumari Sucedaram

KUALA LUMPUR, March 9 (Bernama) --  Saudi Arabia’s Public Investment Fund (PIF) interest in AirAsia signals confidence in the low-cost carrier’s financial prospects, with aviation analysts predicting substantial growth should the investment proceed.

Universiti Kuala Lumpur Malaysian Institute of Aviation Technology economist (aviation and aerospace), Associate Professor Mohd Harridon Mohamed Suffian, believed that the capital expenditure from PIF would significantly aid AirAsia in its financial restructuring process.

According to news reports, PIF is expected to invest about US$100 million in AirAsia, making it the largest contributor to the airline group’s fundraising, which targets around RM1 billion (US$226 million).

The low-cost carrier is also reportedly in talks with investors from Japan and Singapore.

When contacted by Bernama for confirmation, Capital A’s chief executive officer, Tan Sri Tony Fernandes responded, “Won’t be making any comment.”

Further commenting on the PIF’s interest, Mohd Harridon said that the interest reflects AirAsia’s potential  to grow and acquire substantial revenues.

“Investment arms such as PIF usually have a rigid and thorough due diligence process to assess the feasibility of their investments and ensure significant financial gains.

“Thus, if the deal materialises, it indicates that AirAsia has an inherent  and positive prospect of financially thriving in the current aviation ecosystem,” he said.

Moreover, he noted that AirAsia’s expansion would enhance Malaysia’s economic vibrancy, leading to increased job opportunities, higher government revenue through taxation, and a boost in trade due to increased passenger and cargo movement.

“With PIF’s funding, AirAsia is in a favourable position to acquire 350 narrowbody aircraft from Airbus. 

“This is an enormous commercial purchase, and it could be economically viable for Airbus to establish a manufacturing plant in Malaysia to support orders from AirAsia and also from other countries in Southeast Asia,” he pointed out.

However, Mohd Harridon emphasised that this is a propitious economic move for Malaysia, as the manufacturing plant would create more jobs and foster technology transfer. 

“Overall, the domino effect is economically positive, and there should be auxiliary support to help materialise the deal,” he added.

PIF is Saudi Arabia’s sovereign wealth fund and one of the largest in the world, managing about US$930 billion in assets. It also holds a 15 per cent stake in London’s Heathrow Airport.

-- BERNAMA