8-1-2024 (KUALA LUMPUR) Malaysia’s Capital A Berhad announced on Monday its intention to sell its aviation business to long-haul unit AirAsia X Bhd, with the aim of consolidating both its long and short-haul operations under a unified AirAsia brand.
The proposed deal, pending a final agreement and approvals from shareholders and courts, entails the sale of AirAsia Berhad and AirAsia Aviation Group Ltd, which includes AirAsia units in Thailand, Indonesia, the Philippines, and Cambodia. Group Chief Executive Tony Fernandes revealed the plans to reporters but did not disclose the deal value.
Comprehensive details of the agreement will be disclosed within the next two weeks, Fernandes stated during AirAsia’s 2024 outlook briefing.
Fernandes expressed his vision of merging AirAsia X and AirAsia into a single airline, aspiring for it to become an Asean airline, referring to the Association of Southeast Asian Nations, which comprises ten member countries.
Established in 2001 with only two aircraft, AirAsia has since grown to become one of Asia’s largest budget airline operators, with a fleet of approximately 200 planes serving markets in Southeast Asia and China.
Both Capital A and AirAsia X suffered severe setbacks due to travel restrictions imposed during the pandemic and were classified by Malaysia’s stock exchange as PN17, indicating financial distress. Failure to stabilize their finances within a specified timeframe could lead to their delisting from the exchange.
AirAsia X was removed from the PN17 classification in November after implementing measures to improve its financial standing.
Fernandes anticipates that the group’s airlines will likely return to their full pre-pandemic capacity by the end of the first quarter. He also mentioned that the group has 400 planes on order, with Airbus scheduled to deliver new A321 aircraft starting in the second quarter of 2025.
Furthermore, AirAsia aims to expand its routes to include destinations in Europe, South America, and Africa by the end of this year.
During the briefing, Fernandes shared his intention to retire within five years and emphasized that the airline sale would enable Capital A to raise funds and focus on its non-aviation businesses. These include the payments firm BigPay, logistics arm Teleport, and online travel agency airasia MOVE.
“We are confident that by separating the aviation business from Capital A, the non-aviation businesses within the group, which we feel are currently undervalued by the market, will also be recognized for their intrinsic value and potential,” Fernandes stated in a separate statement.
Capital A plans to present a PN17 regularisation plan by June 30, following the completion of the aviation disposal, Fernandes added.
