Capital A plans to dispose of aviation business to AirAsia X
Capital A Bhd plans to dispose of its entire stakes in AirAsia Bhd and AirAsia Aviation Group Limited (AAAGL) to AirAsia X Bhd, for a sum to be agreed upon, as part of a business realignment strategy.Capital A plans to dispose of aviation business to AirAsia X
Chief executive officer Tan Sri Tony Fernandes said the strategic move is aimed at streamlining the group and facilitating a business-centric valuation of the separate entities, potentially unlocking greater value to shareholders. — Picture by Firdaus Latif
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Monday, 08 Jan 2024 7:08 PM MYT
SEPANG, Jan 8 — Capital A Bhd has entered into a non-binding letter of offer with AirAsia X Bhd (AAX) for the proposed disposal of its aviation business, namely AirAsia Bhd (AirAsia Malaysia) and AirAsia Aviation Group Ltd (AAAGL).
AAAGL operates passenger airline services through subsidiaries in Thailand, Indonesia, the Philippines and Cambodia.
Chief executive officer Tan Sri Tony Fernandes said the strategic move is aimed at streamlining the group and facilitating a business-centric valuation of the separate entities, potentially unlocking greater value to shareholders.
“We need to raise funds for business expansion, but gaining access to capital has been challenging due to Capital A’s Practice Note 17 (PN17) status.
“We have been engaging committed investors who have expressed a strong preference for a pure aviation play,” he said during an AirAsia Aviation Group media briefing here today.
Fernandes said in order to address this and ensure a robust financial injection, Capital A has been strategically pursuing the sale of the aviation business to AAX to create an aviation pure play, consolidating both long and short-haul airlines under the AirAsia brand, subject to negotiation of a definitive share sale and purchase agreement and its completion.
“Following the disposal, the aviation business is poised to benefit from focused management and a well-defined strategic direction, which will boost the aviation business’s capacity to seize growth opportunities, expand market share, and ultimately achieve enhanced profitability,” he said.
He also expressed confidence that through the separation of the aviation business from Capital A, the non-aviation businesses within the group, which have been currently undervalued by the market, will also be recognised for their intrinsic value and potential.
Fernandes noted that Capital A’s companies, including Teleport (logistics), Capital A Aviation Services (maintenance, repair and operations, and inflight) and Move Digital, will also be raising capital, offering shareholders an uplift on their Capital A shares, complemented by shares in the enlarged aviation group under a proposed share distribution.
Following the sale of the aviation business, Capital A shareholders would become shareholders of the two strong listed companies, he said.
“We believe this move will bring greater clarity to investments, create a more focused shareholder base, and ultimately unlock value for our shareholders,” he said.
Fernandes said the decision to create a pure play entity aligns with market preferences, providing clearer understanding, valuation, and appreciation for the distinct strengths of both aviation and non-aviation businesses.
Separately, in a filing with Bursa Malaysia today, Capital A said the proposed disposal to AAX was intended to streamline Capital A and its group of companies’ core business activities to focus on aviation services and digital businesses.
On completion of the exercise, the aviation services and digital businesses will mainly encompass Asia Digital Engineering Sdn Bhd, AirAsia SuperApp Sdn Bhd, Teleport Everywhere Pte Ltd and BigPay Pte Ltd.
“Additionally, the entitled shareholders of the Capital A are expected to continue to hold shares in the aviation segment via AAX or a nominated related corporation of AAX listed on the Main Market of Bursa Securities (via a) proposed distribution,” it said.
Capital A said a detailed announcement on the proposed disposal will be made on the signing of a definitive agreement.
On the outlook, Fernandes said the group aims to operate 333 aircraft by 2028 and is looking into spreading its wings to Europe by end of this year.
“My dream, when I retire in five years, is to have five listed companies — one in the United States and four in Asean countries,” he added. — Bernama
