Malaysia’s Capital A Berhad said on Monday (Jan 8) it intends to sell its aviation business to long-haul unit AirAsia X, 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 and AirAsia Aviation Group, 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”, he told reporters at AirAsia’s 2024 outlook briefing.

“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.

AirAsia was founded in 2001 with two aircraft and has since become one of Asia’s largest budget airline operator with a fleet of some 200 planes serving markets including Southeast Asia and China.

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 de-listed from the exchange if they fail to stabilise their finances within a set time frame.

AirAsia X was removed from the classification in November, after undertaking measures to improve its financial position.

Fernandes said the group’s airlines will likely 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.

It also hopes to add routes to Europe, South America and Africa by the end of this year.

Fernandes, who told the briefing that he intends to retire within five years, said the airline sale would help Capital A raise funds and focus on its non-aviation business, which includes 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 recognised for their intrinsic value and potential,” he said in a separate statement.

Capital A plans to present a PN17 regularisation plan by Jun 30, after the completion of the aviation disposal, he said.

Source: Reuters