Castlelake Buys AirAsia Group’s Merah Aviation for $768MM



AirAsia Group Berhad, Asia’s low-cost carrier has, via Asia Aviation Capital Limited, its indirect wholly-owned subsidiary, entered into agreements to sell Merah Aviation Asset Holding, 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 in a deal valued at $768 million. Castlelake is a U.S.-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 four new aircraft to be delivered in 2019.
The 25 existing aircraft (A320-200ceo and A320neo) under Merah Aviation, as well as the four 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 Q2/19.

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 criticized 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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