This article first appeared in The Edge Financial Daily, on March 31, 2016.

KUALA LUMPUR: AirAsia Bhd said its founders and Tune Air Sdn Bhd are not considering a privatisation of the low-cost carrier for now.

On Monday, The Edge weekly reported that AirAsia founders Tan Sri Tony Fernandes and Datuk Kamaruddin Meranun, who collectively control 18.87% of the airline through Tune Air, were in talks with Shanghai-listed China Everbright Bank Co Ltd to privatise the airline.

In a filing with Bursa Malaysia yesterday, AirAsia said after making due enquiries with all the airline’s directors, they are not aware of the reason for the article.

“The founders and Tune Air also indicated that they are not considering a privatisation at this stage,” it added.

News of potential privatisation gave shares in AirAsia a 4% gain from last Friday’s close of RM1.81 to RM1.89 on Monday, but dipped to RM1.77 on Tuesday. It ended the day six sen or 3.39% higher at RM1.83 yesterday, bringing a market capitalisation of RM5.09 billion.

Shares in AirAsia have rallied over 200% since they fell to an all-time low of 78 sen on Aug 26 last year. Year to date, the stock has risen as much as 54 sen or 42% from RM1.29 on Dec 31, 2015, outperforming the FBM KLCI’s 1.5% gain.

A back-of-the-envelope calculation revealed that it would take about RM4.93 billion or RM2.19 per share for Fernandes and the related parties to buy the 81.13% of AirAsia shares not owned by Tune Air, based on adding a presumed 20% premium to yesterday’s closing price of RM1.83.

However, it would have been much cheaper for Fernandes and the related parties to buy over the airline last year when shares in AirAsia started falling in June amid investor concern over a report by Hong Kong-based GMT Research that had questioned the sustainability of the low-cost carrier’s accounting, cash flow and leverage.

In August the same year, talk of AirAsia’s privatisation also surfaced, but the plan reportedly fell through due to funding issues. It would have cost Fernandes and the related parties some RM2.11 billion to take over AirAsia then based on the closing price of 78 sen on Aug 26, 2015.

Maybank Investment Bank Research aviation analyst Mohshin Aziz said rumours of AirAsia’s privatisation had surfaced several times since the airline went public in November 2004, but there was never a formal offer made to AirAsia.

As such, he believes that a privatisation was not as “imminent” as the market would have thought. However, he is of the view that the facts are unconvincing for it to happen this time around.

“AirAsia had called for an extraordinary general meeting on Dec 15 last year to secure shareholders’ mandate to buy back 10% of its shares, sending a firm message that it is not for sale,” said Mohshin.

He noted that AirAsia had commenced its first buy-back tranche shortly after announcing its fourth quarter ended Dec 31, 2015 results in February this year.

“This maiden buy-back proves that the management is making good of its ‘not for sale’ declaration. Furthermore, Tune Air has not accumulated shares in AirAsia for the past 12 months,” said Mohshin.