AirAsia unifies aviation business

AirAsia unifies aviation business

MALAYSIA-BASED airline group Capital A Berhad, operator of budget carrier AirAsia Philippines, is transferring its aviation business to AirAsia X Berhad (AAX) to improve its aviation operations and strengthen financial performance, a company official said on Monday.

Capital A Berhad said it had entered into a non-binding agreement with its unit AirAsia X for the sale of its aviation businesses — AirAsia Berhad and AirAsia Aviation Group Ltd.

“We will combine Malaysia AirAsia and AirAsia Aviation Group, which [includes] Indonesia, the Philippines, Thailand, and Cambodia,” Capital A Chief Executive Officer Tony Fernandes said during an online briefing.

The move “positions AirAsia X to become the overarching regional aviation provider for all short and medium-haul routes under the AirAsia brand name,” Capital A Berhad said in a separate media release.

The definitive sale and purchase agreement are still being finalized, Mr. Fernandes said, adding that the transaction is expected to be signed in the next two weeks.

He said the restructuring would also allow Capital A to focus on its other companies, which include logistics aviation services and a digital services platform.

“Shareholders of Capital A will eventually be shareholders of AirAsia Aviation Group and Capital A. Eventually, AirAsia X and AirAsia will be merged into one airline. We will have a pure aviation group,” he said.

AirAsia X said the acquisition will provide the company “unparalleled advantages” and strengthen its market position by enhancing its financial performance.

“These strategic acquisitions serve as pivotal milestones in AAX’s post-PN17 revival strategy, bolstering our financial stability and enhancing our market positioning,” AirAsia X Chairman Dato’ Fam Lee Ee said.

Last year, AirAsia X exited its PN17 status, which is a classification issued by the Malaysian bourse to companies in financial distress.

“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 recognized for their intrinsic value and potential,” Mr. Fernandes said.

Mr. Fernandes added that the group needs to raise capital as it intends to add more fleet in Indonesia and the Philippines as the two are the group’s growth drivers.

“Really our growth is going to be very heavily driven by the Philippines and Indonesia on top of Malaysia and Thailand, which have a lot of growth. We really want to grow in Indonesia and the Philippines,” he said.

The group is looking to launch flights to the US by the end of this year, citing that it sees potential in the Philippines due to the growing demand in tourism.

The Philippines recorded 5.45-million international visitors in 2023, surpassing its 4.8-million target, the Tourism department said. This year, the agency is targeting 7.7-million visitors.

“By the end of this year, our first re-entry to Europe. And eventually, we’re going to go back to North America and South America. Manila will be a very good hub into America, and Thailand will be a great hub into Europe,” the group said.

For this year, AirAsia said it is working to fully restore its fleet as it seeks to reactivate 191 aircraft by the first quarter of 2024 with 166 already in operation. — Ashley Erika O. Jose