Malaysia’s Capital A Berhad said on Monday it intends to sell its aviation business to long-haul unit AirAsia X Bhd, with a goal of consolidating both its long and short-haul operations under a single AirAsia brand.
The proposed deal, which is subject to a final agreement being signed and to approvals from shareholders and courts, involves the sale of AirAsia Berhad and AirAsia Aviation Group Ltd, which includes AirAsia units in Thailand, Indonesia, Philippines, and Cambodia, Group Chief Executive Tony Fernandes told reporters without disclosing any deal value.
Full details of the deal would be announced “in the next two weeks”, Fernandes told reporters at AirAsia’s 2024 outlook briefing.
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“Eventually AirAsia X and AirAsia will be merged into one airline … my dream is for it to be one Asean airline,” Fernandes said, referring to the 10-member Association of Southeast Asian Nations.
“We are going to merge the two airlines and double passenger traffic to 200 million [per year] from about 80 to 90 million currently,” Fernandes said.
AirAsia was founded in 2001 with two aircraft and has since become one of Asia’s largest budget airline operator serving markets including Southeast Asia and China. Its fleet consists of 166 A320 and A321 planes, while AirAsia X has 17 A330s.
I have been doing it for 22 years. It is the right time to retire. Leadership is about knowing when to step aside
Tony Fernandes, AirAsia CEO
“I have been doing it for 22 years. It is the right time to retire,” he said.
“Leadership is about knowing when to step aside.”
Both Capital A and AirAsia X were hard hit by pandemic travel restrictions and classified by Malaysia’s stock exchange as PN17, or financially distressed. Such firms may be delisted from the exchange if they fail to stabilise their finances within a set time frame.
Capital A CEO Tony Fernandes speaks during a press conference announcing that the conglomerate will merge AirAsia brands. Photo: AFP
AirAsia X was removed from the classification in November, after undertaking measures to improve its financial position.
Fernandes said the group’s airlines is likely to return to full pre-pandemic capacity by the end of the first quarter. He said they have 400 planes on order and Airbus will start delivering new A321 aircraft by the second quarter of 2025.
Fernandes said the airline sale would help Capital A raise funds and focus on its non-aviation business, which include payments firm BigPay, logistics arm Teleport, and online travel agency airasia MOVE.
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“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 recognised for their intrinsic value and potential,” he said in a separate statement.
Capital A plans to present a PN17 regularisation plan by June 30, after the completion of the aviation disposal, he said.
Fernandes, a flamboyant former music industry executive, launched AirAsia as a low-cost airline flying to secondary cities in Southeast Asia, shaking up the region’s aviation sector and inspiring a slew of competitors.
Malaysian conglomerate Capital A intends to merge AirAsia brands. Photo: AFP
AirAsia X was launched in 2007 with lofty ambitions to operate long-haul flights, including to Europe.
But it suspended flights to London and Paris in 2012 because of rising costs, focusing on core markets like Australia, Japan and China.
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