|AirAsia's Aireen Omar -- cool head amidst volatility|
|Written by Aznita Ahmad Pharmy and Kathleen Tan|
|Monday, 25 May 2009 00:00|
As the person instrumental in securing the financing for AirAsia’s huge order of 175 aircraft from Airbus SAS, being level-headed is certainly a plus, especially in these turbulent times.
Last year, Aireen pulled off two major financing deals worth a total of RM3.7 billion that will pay for the delivery of 23 aircraft until next year, and is now working on obtaining financing for 2011 onwards. But securing the financing is just part of the equation — it is crucial to get it on time as any delay in aircraft delivery would affect AirAsia’s entire operations. The complexities involved in locking in the deals strike a chord with Aireen, who relishes new challenges.
The former investment banker has worked in the financial sector for the last 12 years. After obtaining a degree in economics from the London School of Economics and Political Science, Aireen pursued a Masters of Arts in economics at New York University, where her thesis was on Islamic banking.
Her career in finance began in 1997 on the trading floor of Deutsche Bank Securities Inc in New York. Two years later, she returned to Malaysia to work in debt capital markets in Malayan Banking Bhd before moving on to boutique investment firm Bumiwerks Capital Management Sdn Bhd, creating financial models and structures for corporate clients.
In the interview below, she talks about the different facets of her job, including her new responsibilities in treasury, the intricacies of aircraft financing, her passion for what she does, and the challenge of achieving work/life balance.
Manager@Work: As the head of corporate finance, what does your job entail?
Aireen: It’s actually quite a challenging job in AirAsia because we’re a growing company. Currently, I do corporate finance [and] treasury responsibilities as well. For corporate finance, it’s mostly to do with raising funds for the company to enable it to grow, and most of it is catered towards purchasing assets for operations like aircraft, engines and that sort of thing.
We’ve been quite focused on making sure that financing is secure for all our aircraft delivery so that delivery is done on time. If you don’t have it [aircraft] on time, then it will affect the other operations as well. It would affect the whole schedule, especially when we’re growing.
We also assist the business development team in AirAsia if we want to expand operations abroad through joint ventures with other airlines.
Corporate finance also works closely with treasury [which] I recently took over. From the financing that we have raised, we will flag all the risks, see how we can mitigate them… you know, our revenue is in ringgit but our liabilities are in US dollars — we need to hedge to make sure that all effective costs are low and do not increase due to the interest rate exposure.
We don’t want to be subjected to fluctuations in fuel prices, exchange rate. We want to know what our costs are and contain them so that we can take those risks away from our business and let AirAsia do what it does best, which is operating airlines.
We also deal with corporate exercises such as mergers and acquisitions but really, right now, because of our aircraft deliveries, the work is heavily skewed towards aircraft financing.
Do you take the current global economic downturn into consideration?
Oh yes, of course. Last year was very volatile in terms of aircraft financing. Although we have locked them in, I have to make sure that the banks ‘behave’... as per the terms and conditions that they have agreed. You have to monitor more because the markets are more volatile, especially in treasury as well.
At the same time banks are affected, [so] you have to be swift in securing financing and that’s what we did last year… it’s a good thing we did that [lock up our finances for the next two years] because had we waited longer, we may not be able to get financing and if we do, it would not be at a competitive rate. So we locked it up by July, two years’ delivery, 2009 and 2010, to ensure that AirAsia continues not only to get financing under strict credit conditions… but at competitive rates.
So I suppose that’s one of the best things that corporate finance has done.
The job sounds like it covers a lot of areas. What was it that attracted you to it?
I started my career in investment banking. As soon as I graduated, I was working in New York, on the trading floor, for about three years or so, and then I decided to come back to Malaysia to focus on the debt capital market because what I was doing in New York didn’t have that.
After that, I was in an advisory role in investment banking, in a small boutique [firm]. Then I got tired of investment banking — I wanted to do something more entrepreneurial. I was introduced to Datuk Kamarudin Meranun who is the group deputy CEO [of AirAsia]. It sounded very interesting to me, what AirAsia has done and what it plans to do and what I can do for AirAsia in terms of finance. So that attracted me. I joined and never looked back…
So you discussed and then…
When he was explaining it to me, it sort of fit with what I wanted to do… and the whole culture in AirAsia… fits with my personality.
This year, you secured two major financing deals for AirAsia…
Actually, they were secured last year, [but] it was just announced this year. For 2009 and 2010 deliveries, we locked it up with Barclays and BNP Paribas. BNP Paribas, basically the Islamic structure, was done for deliveries last year. That was a groundbreaking structure because it combines Islamic financing and French optimised lease structure, so it was the first of its kind in the aviation industry and also in the Islamic finance industry. That structure was good for us, it has competitive terms and profile. We were able to secure it during turbulent times last year so we were very proud of that, and the structure has so far attracted seven awards worldwide [Editor’s note: Among the awards the deal won last year are Airfinance Journal’s Most Innovative Aircraft Deal of the Year, and Islamic Finance News’ Cross-border Deal of the Year and Ijarah Deal of The Year.]
We are [also] proud because of the fact that it involves the participation of local banks. It encourages local banks to build their skills further because aviation financing is something new in Malaysia… We’d like the local banks to grow with us.
And the fact that it’s a unique Islamic financing structure, it’s a way to position Malaysia as a hub for Islamic financing which is what Bank Negara and the government is trying to achieve quickly.
It’s one way also to assist Malaysia but of course, we want to make sure that the terms are competitive and we believe that Islamic banks can do that. We just need to push them towards creativity to ensure that the overall terms are as competitive as [that of] commercial financiers or better.
Do you foresee using more Islamic finance in future aircraft financing deals?
Well, we hope to do more of it basically because generally, I find Islamic structures are safer in that sense.
When you negotiate for the financing, what are the challenges you face? And what are the skills needed?
We have to make the banks understand where we’re coming from and at the same time, we understand what the market situation is like. We have to understand what their fears are, what are the risks that they are afraid of, and from there, we’ll work towards finding a solution. By understanding [them] and by making them understand our side also, then we can easily negotiate.
What about the negotiation skills? You mentioned that you need to get the deliveries on time; if not it can affect the whole operation. Is the ability to negotiate under pressure very important?
Yes, because sometimes the negotiations could go quite close to the delivery date, so you need to pick and choose which is most important to you and negotiate as much as you can, lah. I don’t know how else to explain (laughs).
You need to be able to negotiate under time pressure as well because ideally, you would like to go through the document three months before the delivery date but usually, it doesn’t happen that way because of external forces.
You’ve secured financing for the delivery of the planes until 2010. Do you have a plan set for 2011 onwards?
Yes, I’m exploring several options. It doesn’t mean that just because I’ve secured [financing] till 2010, I can goyang kaki, I still have to monitor the market situation, the credit market situation especially, and then I need to explore cost-efficient structures because, after all, we are a low-cost carrier, right? So we have to make sure that whatever we do, it is the most cost-efficient way so that we can always continue to offer lower fares for passengers.
I’m currently exploring cost-efficient structures for 2011 and 2012 onwards, basically structures that are safe for us, and structures that will take volume. We have a lot of aircraft deliveries, you see.
So how do you balance the many aspects of your job?
Well, I have a team in corporate finance and I have a team in treasury. I’ll make sure that I have the right sort of people in my team and I identify their strength. Some people may be better at financial modelling and all that, and some people may be better at documentation analysis. We just make use of their strength and encourage it to be developed further so that their skills complement each other’s. We capitalise on each other’s strength.
Would you describe yourself as someone who thrives on complexity?
I would try and make sure that the complexity is simplified. Like why waste time on doing something complex when it can be done in a simplified way, right?
Is it more thinking out of the box or just being logical about it?
Both, because sometimes we’re so used to doing things the way they’re done because it has always been like that. But maybe there’s a simple way of doing it, which has never been done before, so why not just try it and see if it works? But, of course, not at the expense of increased cost.
Your Master’s thesis was on Islamic finance. How did your interest in Islamic finance come about?
At that time, it was something very new. It was an alternative to commercial banking so I was in a way intrigued by it. How can this be a better alternative or a good alternative to the normal conventional banking which we have been doing for hundreds of years? And how can religion affect the way we do banking and does this kind of banking actually enrich the well-being of society as well as the economy? I just wanted to learn more about it.
What piqued your interest in economics? Did you have a natural flair for it when you were young or were you influenced by your family background or upbringing?
My family background probably influenced it because my parents are both entrepreneurs. My dad was a businessman and my mom had her own shop before, a flower shop. I suppose, naturally, I was inclined to want to understand more of the business aspect of things and I thought the best way was to study economics.
There is no hard and fast rule; it’s all abstract. And you have got to develop your own analysis and intuition based on that abstract information.
Do you think you have an innovative streak, and that’s why you tend to gravitate towards jobs that involve developing new products and new ideas?
I am not sure whether it’s about having an innovative streak. One thing I know for sure is that I always like to tinker with new things and new ideas.
What do you bring to your current job from your previous job experiences, having worked with Deutsche Bank, Maybank and Bumiwerks?
For a start, when it comes to receiving proposals from banks, I immediately know what can work and what cannot work! [Laughs] I would know which banks actually did their homework before they did the proposals, or did they simply draw a structure and say this is what we should do, without actually looking into whether it can work or whether it’s a safe structure or not.
And I know what to negotiate for in terms of reducing risk exposure for the company. Banks being banks, of course they’re salespersons as well so you would know which actually would fit. I guess I have that advantage because of my background in financing and structuring.
We were reading an article about you online in which you mentioned that you like airplanes.
The funny thing about that reporter… [laughs] is that he kept asking me, ‘Do you really like planes?’ I’m like, ‘Yeah I like planes’. And he kept asking, ‘Do you think you really, really like planes and because of that you’re doing this job?’ He was really driving me towards that headline!
I wouldn’t say that I am really so passionate about planes, that I know every single spec there is for each type of aircraft, you know? I find planes a very fascinating form of transport and I find it fascinating that someone can actually build planes and can travel all around the world in them. But to say I’m so passionate about it, well, I wouldn’t say so.
Prior to joining AirAsia, did you do any preparations to learn more about aircraft?
Not really. I don’t think in Malaysia you would find someone who has that special skill of aircraft financing because it’s still new basically. It just so happens that I am one of those who are actually exposed [to that area] and developed that skill.
The concept, the principle applied, is the same [as investment banking], just that the underlying asset is different. You need to understand that underlying asset which is usually the form of security for your debt financing, so once you understand the underlying asset, which is the aircraft, how it works and how the airlines use it to operate, then you can negotiate the documents to cater for that.
You mentioned changing jobs because you got tired of investment banking. People have a perception that Generation Y [Aireen is in her thirties] don’t stay at their jobs for long and move quite frequently. What do you think? You yourself have changed jobs a few times since you graduated.
I guess it’s because I was always looking for job satisfaction and contentment in what I do, and if, after a while, I still feel unsatisfied with what I do, then I tend to look for something else that I think could be satisfying. So when I was in investment banking, for some reason, [it’s] as though I couldn’t be satisfied with whatever that I do. Even though it’s interesting, it probably lasts for one or two years, then after that I’m like, ‘Okay, what exactly am I doing here?’ I’m helping companies find ways to raise financing and what structures are good… but I’m not really informed on the operations side, I’m not really hands-on in the business side of it. I’m just one aspect of the big operations that they have, which is the financing aspect.
Whereas, here in AirAsia, I actually have a better understanding of the business, what the business needs, and you have the opportunity to also contribute to that business, [and] not only in the areas I specialise in. And I feel what I’m doing and how I can contribute and develop the business better, is more satisfying than what I did before.
How do you actually practise work/life balance?
I think that’s a skill that I always find difficult to sharpen. I do think it’s important to have a balance but it’s quite a difficult task to do. Whatever it is, my family always comes first. I’m not too sure whether I’m spending enough time with them or not, but the thing is, with current technology, I can try to do work at home, so at least I’m with them.
I don’t know if there’s anyone else who actually manages to do that [work/life balance] very well! [Laughs]
But I think it’s really important to enjoy what you do in your job because, then, work becomes play. It becomes part of your life so that you don’t really mind.
Do you see yourself as a workaholic?
Probably. Because if you’re really so passionate and like what you’re doing, it tends to carry on after the official working hours because you keep thinking, ‘What else can I do better? What else can I improve? What are the new ideas I can tinker with?’
When you do get time off work, what are some of your hobbies?
I like travelling, as I like to explore different cultures and see new places. I take aikido lessons as well although I’m not very good at doing it regularly! I would like to spend more time sharpening my skills at aikido if I can.
I like swimming a lot [as] I find it relaxing. Once in a while, I play tennis or squash with my friends. I try to do brisk walking before I go to work. So far, it’s not everyday [but] twice a week. And I do Pilates also but that’s only on the weekends. I try to do all my sporting activities over the weekend.
Do you think you’re someone who always has to be doing something?
I suppose you could say so, but there are times that I don’t feel like doing anything. That usually lasts four to five days or one week at most. Then I think, ‘Okay, I feel like I’ve been lazy, I should do something!’
What’s a typical day like for you at work?
As soon as I enter [the office], I’ll probably check on the progress of the work that we need done, which I have delegated to some of my team members. Generally, the first thing I would check in the morning is what happened in New York. I try to sleep as late as possible to see what happens in NY because the NYSE opens at 9am, which is 9pm over here, so I try to catch as much as I can. If there’s nothing shocking or extraordinary, I’ll go to bed but if there is, I’ll stay up a bit later.
I car pool with a colleague to work so while I wait for her to come over to my house, I’ll switch on CNBC and see what happened in New York, the markets that have opened in Asia and how they’re doing. Then when I come home, I’d probably still monitor what’s happening.
Since I just took over treasury, I have yet to find that balance to segregate my time between treasury and corporate finance, to find a way that works so that it doesn’t tire me out… so I won’t be completely knocked out as I was last week where as soon as I got home, I needed to go to bed. It’s mentally challenging and exhausting as well.
I get market updates from banks through emails, text messages on things that we monitor such as fuel interest rates and foreign currencies. In a way, I feel that I am able to cope with the new expanded role so far because I have already secured all the financing for 2010, so I don’t have to worry so much about that. It’s just a matter of following up, of making sure things are in order. As I can delegate that to one of my team members, I can still concentrate on what’s happening in the market until I get used to it.
Currently it’s that position, that state, where I am trying to be ‘possessed’ by the market until I’m really used to it. So I’ll know how to balance it out once I fully understand how the market actually works… but I don’t think anyone can fully understand how the market works because nobody really knows where it’s going to be in a year or two years’ time. We can try to form a logical opinion but it may not reach that, you’re not above the market, the market is always above you.
This article appeared in the Manager@work, the monthly management pullout of The Edge Malaysia, Issue 756, May 25-31,2009.