Tycoon Tony Fernandes’ Capital A To Consolidate Aviation Business Under AirAsia X Amid Travel Rebound

Capital A- controlled by Malaysian tycoons Tony Fernandes and Kamaruddin Meranun — plans to consolidate its aviation businesses under the group’s long-haul subsidiary AirAsia X amid a post-pandemic rebound in travel demand.

Under the plan, AirAsia Bhd and AirAsia Aviation Group will be merged into AirAsia X. Fernandes expects the combination to strengthen AirAsia X, which was deemed a financially distressed company after auditor Ernst & Young cast it under Bursa Malaysia’s Practice Note 17 (PN17) in October. Significant doubt over the airline’s ability to continue as a going concern.

“I am confident that we will soon be in a position to remove the PN17 position, which will not involve loss of shareholder value, subject to necessary approvals including from Bursa Malaysia,” Fernandes said in a statement on Wednesday.

The plan, which is expected to be completed in July 2023, entails divesting Capital A’s shareholding in AirAsia and AirAsia Aviation to AirAsia X in an all-share deal. The consideration shares to be issued by AirAsia X will be distributed to Capital A shareholders.

Capital A is improving the group’s aviation business as AirAsia X recently reported a net profit of 25 million ringgit ($5.5 million) in the three months ended September, compared with a net loss of 652.5 million ringgit in the previous quarter. Returned to colour.

“It is encouraging to see the continued upward trend for air travel with the festive season and school holidays in the last quarter of 2022,” Fernandez said. “Also encouragingly, China has also begun to ease its domestic COVID restrictions, which may indicate early signs of a reopening that will further boost air travel demand.”

The resurgence in travel demand is also boosting Capital A’s digital businesses such as ride-hailing, delivery and fintech services, Fernandes said. While the group’s revenue rose 34% to 2 billion ringgit in the third quarter, it reported a net loss of 1.1 billion mainly due to one-off charges and unrealized foreign exchange losses. Excluding such charges, the operating loss was 322 million ringgit.

Fernandes and Kamaruddin acquired AirAsia in 2001 to build a low-cost carrier that would make air travel affordable. The partners dropped out of the ranking of Malaysia’s 50 richest people last year.

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