AirAsia Group plans to raise USD300 million to expand its digital business arm, AirAsia Digital, as it intensifies the diversification of its business to offset the COVID-19 crippling effect on aviation.

Bloomberg, quoting “people with knowledge on the matter”, reported the low-cost carrier was negotiating with prospective investors for a fundraising deal that would involve the issuance of new shares in the digital unit.

In March 2021, founder and Chief Executive Officer, Tony Fernandes, said the airline’s so-called “super app”, launched in October 2020, would turn over USD250 million this year. The app can be used for shopping, booking flights, and ordering food. Services are predominantly in Malaysia at the moment with “airasia Shop” having expanded to the Philippines and Indonesia, while “airasia Food” has launched in Singapore. In 4Q2020, order amounts with “airasia Food” grew more than five times quarter-on-quarter, the company said in its Fourth Quarter and Full Year 2020 financial results.

As part of the group's diversification push, AirASia also aims to launch an air taxi service and drone delivery service, state news agency Bernama reported earlier this month.

Facing a record net loss of MYR2.7 billion ringgit (USD653 million) in the October-December 4Q2020, Fernandes recently told the South China Morning Post the carrier would be returning 22 aircraft to lessors in 2021 and 2022.

The airline’s revenue decreased by 92% year-on-year (YoY) due to partial lockdown in Malaysia in October and November 2020, while non-airline revenue declined by 46% in the same period. The company said the weaker YoY performance was due to the shortfall in revenue and several one-off costs, including a fuel hedging loss of MYR391 million (USD77.2 million), impairment of right-of-use assets, receivables, finance lease receivables of MYR1.5 billion (USD363 million), and bankruptcy costs for AirAsia Japan (DJ, Nagoya Chubu) of MYR20 million (USD4.8 million).

Meanwhile, AirAsia Digital’s performance for the quarter grew by 13% YoY in terms of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation). Launched in October 2020, the AirAsia “super app” increased revenue by 15% YoY to MYR12 million (USD2.9 million), while the "BigPay" mobile payment app narrowed EBITDA loss by 41%. The company’s cargo and logistics arm, "Teleport", reported a positive EBITDA of MYR17 million (USD4.1 million) despite a decline in revenue from impacted cargo capacity due to closed borders. Its loyalty programme, "BIG Rewards", also reported positive EBITDA for the quarter.