1.         INTRODUCTION

            We refer to the preliminary announcement made by AirAsia on 29 June 2009 in relation to the Proposed Private Placement.

On behalf of the Board of Directors of AirAsia (“Board”), we, CIMB Investment Bank Berhad (“CIMB”), wish to announce that AirAsia has finalised certain details of the Proposed Private Placement, which will entail a private placement of up to 481,144,400 new ordinary shares of RM0.10 each in AirAsia (“AirAsia Shares”), representing up to 20% of the issued and paid-up share capital of the Company to placees to be identified later.

2.         DETAILS OF THE PROPOSED PRIVATE PLACEMENT

2.1          The maximum number of up to 481,144,400 new AirAsia Shares to be issued pursuant to the Proposed Private Placement (“Placement Shares”) was arrived at based on the issued and paid-up share capital of AirAsia as at 27 July 2009 of RM237,559,858 comprising 2,375,598,580 AirAsia Shares and assuming full exercise of the options which have been granted and are exercisable up to 27 July 2009 to subscribe for a maximum of 30,123,900 new AirAsia Shares at RM1.08 per AirAsia Share (“Existing Options”) pursuant to AirAsia’s employees’ share option scheme after obtaining the relevant authorities’ approvals but prior to the date of allotment of the Placement Shares. 

2.2           The actual number of Placement Shares to be issued pursuant to the Proposed Private Placement would depend on the issued and paid-up share capital of the Company on a date to be determined later after obtaining all relevant approvals.

2.3          The Proposed Private Placement may be implemented in tranches depending on investors’ interest at the point of implementation. In this regard, there could potentially be several price fixing dates depending on the number of tranches and timing of implementation.

2.4         The Placement Shares shall, upon allotment and issue, rank equally in all respects with the existing issued and fully paid-up AirAsia Shares, save and except that the Placement Shares shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the Placement Shares.

Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Article 43(1) of AirAsia’s Articles of Association, only those foreign interests who hold shares up to the current prescribed foreign ownership limit of 45% of the total issued and paid-up share capital, on a first-in-time basis based on the Record of Depositors to be used for the extraordinary general meeting (“EGM”) to be convened, shall be entitled to vote. Consequently, the disenfranchised voting rights shall be automatically vested in the Chairman of the EGM to be convened.

2.5       The issue price of the Placement Shares will be fixed at a date to be determined later by way of bookbuilding and shall be the higher of the following:

(i)                   not more than a 10% discount to the 5-day weighted average market price of AirAsia Shares immediately prior to the price fixing date; or

(ii)                 the par value of the AirAsia Shares.

For illustration purposes, based on the issue price of RM1.25 per Placement Share, representing a discount of 3.10% to the 5-day weighted average market price of AirAsia Shares up to and including 27 July 2009 of RM1.29, the Proposed Private Placement is expected to raise gross proceeds of up to RM601.431 million. The proceeds shall be utilised to repay part of the borrowings of AirAsia, finance the working capital requirement of AirAsia and to defray expenses relating to the Proposed Private Placement.

2.6               The Placement Shares will be placed out by way of bookbuilding by placement agents appointed/to be appointed by AirAsia and the placees will be identified at a later stage. 

The Placement Shares are not intended to be placed out to the Directors, major shareholders, Chief Executive Officer of the Company and/or any persons connected to them (collectively referred to as “Related Parties”).  However, the Placement Shares may be offered to substantial shareholders of AirAsia who are also institutional fund managers.

AirAsia and its placement agents shall ensure full compliance with the provision of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the Main Market issued by Bursa Securities in relation to the Proposed Private Placement.

2.7        The Placement Shares may be offered to local and foreign institutional investors. However, it will not be an offer of securities for sale into the United States (“US”). The Placement Shares may not be offered or sold in the US or to, or for the account or benefit of US persons (as such term is defined in Regulation S under the US Securities Act of 1933) unless they are registered or exempt from registration.

2.8        The Placement Shares will be listed and quoted on the Main Market of Bursa Securities.

3.         RATIONALE FOR THE PROPOSED PRIVATE PLACEMENT

The Proposed Private Placement will enable the Company to strengthen its balance sheet and increase financing flexibility. It will also reduce the current net gearing position of the Company and its subsidiaries ("AirAsia Group" or "Group").

4.         EFFECTS OF THE PROPOSED PRIVATE PLACEMENT

For illustration purposes, the effects of the Proposed Private Placement on the share capital, shareholding structure, dividend policy and convertible securities of AirAsia and net assets, earnings and gearing of AirAsia Group shall be based on 2 scenarios:

4.1        Share Capital

The proforma effects of the Proposed Private Placement on the issued and paid-up share capital of AirAsia as at 27 July 2009 are set out in Table 1.

4.2        Substantial Shareholders’ Shareholdings

Based on the Register of Substantial Shareholders of AirAsia as at 27 July 2009, the proforma effects of the Proposed Private Placement on the shareholdings of the substantial shareholders of AirAsia are set out in Table 2.

4.3        Net Assets and Gearing

Based on the unaudited consolidated balance sheet of AirAsia for the 3-month period ended 31 March 2009 and audited consolidated balance sheet of AirAsia for the financial year ended 31 December 2008, the proforma effects of the Proposed Private Placement on the consolidated net assets and gearing of the AirAsia Group are set out in Table 3.

4.4        Earnings

Save for the interest savings arising from the repayment of part of the borrowings of the AirAsia Group, the Proposed Private Placement is not expected to have any material effect on the earnings of the AirAsia Group for the financial year ending 31 December 2009 as the Proposed Private Placement is expected to be completed by the fourth quarter of 2009.  However, the earnings per share of the AirAsia Group for the financial year ending 31 December 2009 shall be correspondingly reduced as a result of the increase in the Company’s issued and paid-up share capital.

4.5        Dividend

The Board of AA has not deliberated or proposed any dividend payment for the financial year ending 31 December 2009 and does not expect the Proposed Private Placement to have any impact on the dividend policy of the AirAsia Group. The decision to declare and pay dividends in the future financial years would depend on the financial performance, cashflow position and financing requirements of the AirAsia Group.

      4.6        Convertible Securities

Save for the Existing Options, AirAsia does not have any convertible securities. The Proposed Private Placement will not have any impact on the number, exercise price and terms of the Existing Options.

5.         CONDITIONS OF THE PROPOSED PRIVATE PLACEMENT

The Proposed Private Placement is conditional upon approvals being obtained from the following:

(i)                   Bursa Securities, for the following:

(a)                 Proposed Private Placement; and

(b)                 listing of and quotation for the Placement Shares on the Main Market of Bursa Securities;

(ii)                 shareholders of AirAsia at an EGM to be convened; and

(iii)                any other relevant authority (if required).

At the Company’s Annual General Meeting (“AGM”) held on 3 August 2009, shareholders of AirAsia had passed a resolution pursuant to Section 132D of the Companies Act, 1965 (“Act”) that empowers the Directors of AirAsia to allot and issue new AirAsia Shares from time to time and upon such terms and conditions and for such purposes as the Directors of AirAsia may deem fit provided that the aggregate number of AirAsia Shares to be issued shall not exceed 10% of the issued and paid-up share capital of the Company (excluding the number of AirAsia Shares arising from the exercise of Existing Options) (“General Mandate”). The existing General Mandate is valid until the conclusion of the next AGM of the Company.

AirAsia intends to undertake the Proposed Private Placement and to issue the Placement Shares as follows:

(i)                   part thereof pursuant to the General Mandate; and

(ii)                 the remainder thereof pursuant to a specific shareholders’ approval which will be sought at the EGM referred to in (ii) above,  

which in aggregate will represent up to 20% of the enlarged issued and paid-up share capital of AirAsia assuming full exercise of the Existing Options. 

The Proposed Private Placement is expected to be completed by the fourth quarter of 2009.

6.         DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

As at the date hereof, no placee has been identified and no placement arrangement is in place.  It is the intention of the Board that none of the Related Parties will be identified as placees.  As such, as at the date hereof, none of the Related Parties have any interest, direct or indirect, in the Proposed Private Placement. 

However, the Placement Shares may be offered to substantial shareholders of AirAsia who are also institutional fund managers.

7.         DIRECTORS’ STATEMENT

The Directors of AirAsia, having considered all aspects of the Proposed Private Placement, are of the opinion that the Proposed Private Placement is in the best interest of the Company.

8.         ADVISER AND PLACEMENT AGENT(S)

CIMB has been appointed as the Adviser and Placement Agent to the Company for the Proposed Private Placement.

9.         APPLICATION TO THE RELEVANT AUTHORITIES

Applications to the relevant authorities for the Proposed Private Placement (where applicable) are expected to be made within 1 month from the date of this announcement.

This announcement is dated 3 August 2009.