* Sale is part of airline's strategy to trim non-core assets
* Sale of some planes, engines will raise $902 mln in cash
* AirAsia expected to cut debt and pay out extra dividends
* AirAsia shares rise 5 pct to a record after deal announced (Adds details of deal, comments from analyst)
By Liz Lee and Anshuman Daga
KUALA LUMPUR/SINGAPORE, March 1 (Reuters) - AirAsia Bhd is selling its plane leasing operations to firms managed by BBAM Ltd, one of the world's largest aircraft portfolio managers, in a staggered deal that will see the budget carrier transfer ownership of up to 182 Airbus jets.
The transaction, valued at $1.2 billion in the first phase, will help Asia's biggest budget airline cut debt and return money to shareholders, as well as give it firepower to grow its business. AirAsia shares rose 5 percent to a record on Thursday after the deal was announced.
Malaysia-based AirAsia is cashing in on a booming leasing sector after ordering hundreds of Airbus planes at bargain prices in recent years to become one of Airbus' biggest customers.
The sale is part of AirAsia's restructuring efforts that include selling stakes in businesses and revamping associate airlines since the group's finances came under scrutiny three years ago as amounts owed by its associate firms rose.
In the first phase of the transaction, AirAsia will sell a portfolio of 84 aircraft and 14 engines to Fly Leasing Ltd , Incline B Aviation Ltd Partnership and Nomura Babcock and Brown for $1.2 billion.
"Investors have historically been concerned that AirAsia's revenue relied too heavily on aircraft leasing income. In addition, AirAsia's huge aircraft order book would require significant financing and investors are concerned about the risk of its rising financial leverage," said Corrine Png, CEO of transport research firm Crucial Perspective.
"As such, the proposed disposal not only alleviates these concerns but also serves to unlock value for AirAsia's shareholders," she said.
AirAsia will lease the planes back from BBAM-entities, thus saving on large fixed costs.
Fly and Incline also plan to acquire 48 to-be-delivered planes and have an option to acquire a further 50 aircraft to be delivered. AirAsia said it will agree the sale price with the parties at a later date.
"Today's sale is much in line with our stated strategy of disposing non-core assets and businesses, an undertaking which we have successfully executed over the last six months – starting with our training centre, ground handling unit and now our leasing unit," AirAsia Group CEO Tony Fernandes said in a statement.
Fernandes, who built AirAsia up from a two-plane operation in 2002, had been exploring a sale of the leasing operations for the past two years.
AirAsia said the sale will raise about $902 million in cash proceeds. The deal will also see AirAsia take a 10.2 percent stake in Fly.
San Francisco-based BBAM has more than 400 aircraft under management. In September, Singapore sovereign wealth fund GIC agreed to buy a 30 percent stake in the company, which counts Canadian private equity company Onex Corp among its investors.
Including Thursday's gain, AirAsia's shares have risen 37 percent this year, valuing it at nearly $4.0 billion.
Credit Suisse, BNP Paribas and RHB acted as joint financial advisers to AirAsia on the transaction. ($1 = 3.9275 ringgit) (Reporting by Liz Lee in Kuala Lumpur and Anshuman Daga in SINGAPORE; Additional reporting by Praveen Menon; Editing by Edwina Gibbs and Muralikumar Anantharaman)