KUALA LUMPUR (Jan 18): Air Asia Bhd’s share price jumped by as much as 5.7% or 14 sen to RM2.60 on news that the budget carrier may pay a special dividend to investors from proceeds of its proposed sale of its aircraft-leasing arm.

At 4.33pm, the stock was trading at RM2.60, pegged at 13x its price-earnings, with 38.9 million shares changing hands. Its market capitalisation stood at RM7.2 billion.

AirAsia shares have risen by 20% since Jan 9.

In an interview with Bloomberg TV in Davos, Switzerland, AirAsia Group CEO Tony Fernandes said he expects to get binding bids for the aircraft-leasing unit, Asia Aviation Capital Ltd, by March and hopefully close the deal by summer.

Fernandes said AirAsia’s directors will make the final call on whether to use the proceeds to pare down debt or pay dividends.

“Our gearing is very low anyway, but I always like to have more cash than less cash,” Fernandes was quoted as saying, adding that “it’s really up to the board to finally decide what to do with that.”

In May last year, Fernandes said Asia Aviation Capital has received an offer valued at US$1 billion.

Kenanga Research has an outperform call on AirAsia, with a target price of RM3.82, pegged at 9x its forward price-earnings.

The outfit has also assumed that if the entire stake of Asian Aviation Capital is valued at US$1 billion, then an 80% stake sale, coupled with a 100% dividend pay-out would translate to a dividend per share of RM1.04.

“However, we have yet to factor this in into our estimates as the final amount and portion of the stake sale remains uncertain,” its analyst Lum Joe Shen wrote in a report dated Jan 5.