November 24, 2016 / 1:15 PM / 3 years ago

UPDATE 1-Malaysia's AirAsia plans IPO of ASEAN airline holding company

(Adds details on leasing arm sale, IPO plans)

* Q3 net profit 353.9 mln rgt vs net loss 406 mln last year

* Company targets leasing unit sale in early-2017

* Plans two IPOs in Malaysia and Hong Kong

By Liz Lee

KUALA LUMPUR, Nov 24 (Reuters) - Asia’s biggest low-cost airline AirAsia Bhd plans an initial public offering of a holding company that will house all its ASEAN operations, group CEO Tony Fernandes said on Thursday.

ASEAN Holding Co will be listed in Hong Kong, Fernandes said in a statement without giving a timeline. AirAsia will also list its flight crew training centre in Kuala Lumpur, he said, following the company’s third-quarter results.

Fernandes did not say how much the IPOs will raise.

He has in the past expressed a desire to combine the airline’s operations in its home country Malaysia with those in Indonesia, Thailand and the Philippines.

“The plan is to list Indonesia and Philippines first by next year before looking at ASEAN Holding Co to be listed,” a company spokesman told Reuters.

AirAsia is also looking to divest some of its non-core businesses. It already has its aircraft leasing arm on the market and aims to complete the sale in early 2017 following bids that are due in December, Fernandes said, adding that he valued the unit at about $1 billion.

Reuters reported in August that AirAsia was looking to sell a majority stake in its Asia Aviation Capital leasing operation, or possibly the entire business, which the carrier values at 4.1 billion ringgit ($922.38 million).

Last month, AirAsia said it had received good interest in the sale.

AirAsia also said on Thursday it swung to a profit in the third quarter, from a net loss a year ago, driven mainly by an increase in aircraft operating lease income and lower oil prices.

Net profit for the three months ended Sept. 30 was 353.9 million ringgit ($79.62 million), versus a net loss of 405.7 million ringgit a year ago. Revenue rose 11.2 percent to 1.69 million ringgit, the company said.

The results were underpinned by a load factor of 87 percent, a measure of how full planes are, up 6 percentage points from the same period last year.

The number of passengers carried rose 11 percent, ahead of an increase in seat capacity of 2 percent year-on-year, according to AirAsia’s statement.

AirAsia expects average load factor for its Malaysia business to remain at 89 percent in the following quarter, riding on strong demand due to year-end holidays and festivities.

It forecasts load factors of more than 80 percent for its operations in Thailand, Indonesia and the Philippines for the fourth quarter.

On Tuesday, the group’s long-haul unit, AirAsia X Bhd swung to a net profit of 11.03 million ringgit. Revenue was higher at 982.4 million ringgit.

Shares of both AirAsia X and its parent have more than doubled this year, after sharp losses in 2015. ($1 = 4.4450 ringgit) (Reporting by Liz Lee; Editing by Himani Sarkar and Adrian Croft)

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