The board of AirAsia X (D7, Kuala Lumpur International) has released details of its proposed acquisition of AirAsia Bhd, operator of AirAsia (AK, Kuala Lumpur International), and AirAsia Aviation Group, operator of the non-Malaysian AirAsia-branded airlines. In addition, in an April 26 Bursa Malaysia filing, the board detailed plans for an issuance of free warrants, a private placement, and a share capital reduction following the finalisation of the bid.

The planned purchase will be accompanied by an internal reorganisation that will see seven airline entities operating under the AirAsia brands (including AirAsia X) collected into a new investment holding company called AirAsia Group Sdn Bhd, formerly AirAsia Aviation Group. The filing says this will improve "synergistic benefits through centralised decision making and more co-ordinated network plans," particularly regarding fleet management and utilisation. As of mid-April, the airlines to be transferred in the new holding company had around 400 aircraft on order (mainly secured by AirAsia Bhd), with deliveries running through 2035.

AirAsia Bhd and AirAsia Aviation Group Ltd are wholly owned subsidiaries of Capital A. In addition to the Malaysian AirAsia carrier, the airlines transferring to AirAsia Group include AirAsia Cambodia, Thai AirAsia, AirAsia Philippines, Indonesia AirAsia, AirAsia X, and Thai AirAsia X. Each airline holds its own air operator's certificate and will continue to do so.

The filing notes that AirAsia Group Sdn Bhd has entered into two conditional share sale and purchase agreements with Capital A, including an April 25, 2024, share sale and purchase agreement for a 100% equity interest in AirAsia Aviation Group Ltd for MYR3 billion ringgits (USD629 million) to be satisfied via the issuance of 2,307,692,307 shares in AirAsia Group Sdn Bhd, and an April 25 share sale and purchase agreement for a 100% equity interest in AirAsia Bhd for MYR3.8 billion (USD797 million) to be satisfied by the assumption of debt owed by AirAsia Bhd to Capital A. AirAsia Group Sdn Bhd will list was 447,072,803 shares on issue.

The reorganisation will take place via a members scheme of arrangement whereby all the ordinary shares in AirAsia X will be swapped for ordinary shares in AirAsia Group Sdn Bhd on a one for one basis. The latter entity will assume AirAsia X's listing status on the Malaysian bourse, with AirAsia X delisting. AirAsia X will become a wholly-owned subsidiary of AirAsia Group Sdn Bhd. The acquisitions and reorganisation remain subject to Bursa Malaysia and shareholder approval.

Following the reorganisation, the board intends issue new warrants, conduct a private placement, and reduce share capital, specifically:

  • issuing 223,536,402 free warrants in AirAsia Group Sdn Bhd on the basis of one warrant for every two shares. The warrants will have a tenure of five years from the issue date, with the exercise price yet to be decided.
  • offering a private placement of shares in AirAsia Group Sdn Bhd valued at MYR1 billion (USD210 million). The company does not intend to issue these shares to directors, major shareholders, executives, or people/entities associated with them. The proceeds are expected to be used over 24 months, with roughly half going to fund aircraft, engines, and parts, around 30% of payment of AirAsia Bhd debt, and the remainder for general working capital.
  • reducing the issued share capital in AirAsia Group Sdn Bhd to MYR100 million (USD21 million) by cancelling paid up share capital which is lost or unrepresented by available assets.