Talks are underway to allow the long-haul low-cost carrier AirAsia X to acquire Capital A Berhad’s aviation arm, AirAsia, and the AirAsia Aviation Group Limited (AAAGL) stakes in Philippines AirAsia, Indonesia AirAsia, and Thai AirAsia. If the deal goes through, the assorted AirAsia branded airlines and companies will become a single aviation business.
In a November 29 Bursa Malaysia filing seeking an extension of time to submit AirAsia's regularisation plan, Capital A CEO Tony Fernandes flagged the merger and said that it wouldn't involve any cash. Instead, Capital A shareholders would receive AirAsia X (AAX) shares.
"The plan envisaged will entail the disposal of Capital A’s aviation businesses, namely AirAsia Berhad and AirAsia Aviation Group Limited, to AirAsia X Berhad (AAX)," Fernandes said in the filing. "Capital A shareholders... will retain a direct interest in the aviation businesses via AAX, following the restructuring. In essence, via this scheme, Capital A’s shareholders’ value will be preserved."
The various AirAsia branded airlines operate short to medium-haul domestic and international flights while AirAsia X is a low-cost Asia-Pacific long-haul operator. Capital A Berhad and AirAsia X are in the middle of a restructuring process and are subject to Bursa Malaysia Practice Note 17 (PN17) requirements to regularise their financial affairs.
Malaysia's Edge news portal reports the merged airline would trade as AAX on the Bursa Malaysia while the group's non-aviation-related assets, namely the AirAsia Super App, logistics business Teleport, fintech BigPay, and Redbeat Capital would be retained by Capital A.
The Edge reports a merger was considered at the board level earlier this year but ultimately rejected given AirAsia X's then perilous financial status. That airline has since made considerable strides in its financial recovery and reported a cash balance of MYR79.5 million ringgits (USD17.9 million) as of September 30 and a quarterly profit before tax of MYR23.8 million (USD5.4 million).
While Capital A and AirAsia X are separately listed companies, they have common founders in Fernandes and Datuk Kamarudin Meranun. Both men retain 24.64% stakes in Capital A via their private investment companies and both have substantial direct and indirect stakes in AirAsia X.
The Bursa Malaysia filing notes that the merger plans are subject to approval from the board of directors, shareholders, Bursa Malaysia and other regulatory authorities. AirAsia and AirAsia X presently aim to complete their regularisation proceedings and break free from the shackles of Bursa Malaysia PN17 supervision by July 2023.
