The Star is reporting that Capital A Bhd has entered into a conditional share sale and purchase agreement with AirAsia Group Sdn Bhd (AAG) to dispose of its 100 per cent equity interest in AirAsia Aviation Group Ltd (AAAGL) and AirAsia Bhd (AAB) for RM6.8 billion.
The move will see the formation of a new AirAsia Group, comprising the former AirAsia Aviation Group’s airline units in Malaysia, Thailand, Indonesia and the Philippines, as well as AirAsia X and Thai AirAsia X.
This will make AirAsia the largest low-cost airline group in Asia.
Pursuant to AirAsia X Bhd’s (AAX) proposed internal reorganisation, AAG will assume the listing status of AAX before the completion of the proposed disposals.
CEO of Capital A and Advisor to the newly formed AirAsia Aviation Group, Tony Fernandes said, “Today’s announcement is more than just a transaction, but a unique and time-sensitive opportunity to elevate our aviation business to the next level, while driving growth and profitability across core non-airline business portfolios for Capital A. The divestment facilitates clear distinction between Capital A’s main portfolios of businesses – the aviation group, digital businesses, and logistics plus aviation services to optimise synergies across entities and unlock greater value for all stakeholders.”
He added, “When AirAsia was founded in 2001, our vision was clear: to establish a low-cost airline model focused on simplicity and cost-efficiency, primarily operating single-type narrowbody aircraft optimised for short-haul flights. To capture the medium-haul market, AAX was created in 2007 adhering to the same principles of low-cost, and efficient operations. The emergence of Airbus’ A321LR and A321XLR, is an unprecedented, game-changing opportunity.”
Bo Lingam, Group CEO of AirAsia Aviation Group said, “We are excited about the dawning of a new era, where AirAsia and AAX operations will unify to create a single-type fleet that can reach the entire world, without the complexities associated with a mixed fleet. With extended 7- to 10-hour range capabilities and unparalleled fuel efficiency, these aircraft can fly further and more efficiently than previous narrowbodies, allowing us to explore new destinations and pioneering new and underserved routes, which has been the hallmark of AirAsia’s success. Our ambition is to rival global giants with a profitable, low-cost network spanning the globe.”
Benyamin Ismail, CEO of AirAsia X said, “We wholeheartedly welcome the strategic acquisition. Over the next five years, we plan to leverage the extended range capabilities of the new specification aircraft to connect Asean to Europe, Africa, Central Asia, and North America, solidifying our position as a key player in the global aviation market. The “One Airline” strategy accelerates our journey, leveraging existing routes, approvals, and slots for rapid expansion. For AirAsia X shareholders, this is a rare opportunity to acquire not one, but four established and growing Asean-based airlines with existing routes, approvals and slots – at a cost outlay of just RM3 billion in new shares issuance. The proposed exercise offers AirAsia X a growth lifeline leveraging Capital A’s aircraft order book of almost 400 aircraft with an ongoing delivery timeline up to 2035. While the process has been long-winding and intricate, we remain committed to safeguarding shareholder interests.”
Fernandes explained, “Turning Capital A’s shareholders’ equity positive, which is a major step forward in exiting Practice Note 17 (PN17), is a welcome benefit but ultimately immaterial in our decision to pursue this proposed divestment. The puzzle of bringing together all AirAsia airlines under a single umbrella had been on our minds for many years and the missing piece has finally arrived in the form of the new-generation Airbus aircraft. Our driving motivation has been to unlock and realise value for our shareholders, though we also remain steadfast in our commitment to emerge successfully from PN17, propelled by our resilience and determination to navigate challenges.
“We have emerged out of the long tunnel called Covid, more resilient, refined and fortified. We have created five great companies– aviation, logistics, digital businesses, aviation services and IP business – all with enormous value and immense potential. I am confident they will evolve into the next AirAsia’s, embodying value and innovation,” he added.
