Capital A to combine AirAsia and AirAsia X as part of restructuring plan

Singapore Technologies Engineering

29/11/2022 10:00

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      Aims to shed status as financially-distressed company
    

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      Capital A will retain digital, logistics, services
businesses
    

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      Investors to receive in-specie distribution of aviation
business
    

  
    By Jamie Freed
       Nov 29 (Reuters) - Malaysia's Capital A  CAPI.KL  will
combine its AirAsia budget airline business with long-haul
offshoot AirAsia X  AIRX.KL  as part of a corporate
restructuring designed to shed its status as a
financially-distressed firm, CEO Tony Fernandes said.
    Capital A, headed by Fernandes, will retain the digital,
logistics and aviation services businesses, while AirAsia X will
be renamed AirAsia Aviation and be led by long-time executive Bo
Lingam under the plan. Capital A hopes submit to Bursa Malaysia
Securities for approval in February. 
    Capital A, which racked up losses during the pandemic, was
in January classified as a 'Practice Note 17', or PN17, company
by the Malaysian bourse, a tag given to financially distressed
firms. PN17 companies may be de-listed if they fail to
regularise their finances within a set time frame.
    AirAsia X is also classified as PN17, but in an interview
with Reuters on Tuesday, Fernandes said under the restructuring
plan, both listed companies would emerge from that status by
July 2023. Capital A investors will receive an in-specie
distribution in the former AirAsia X, giving them exposure to a
pure airline business with multiple brands.
    "From what looked like a very sick airline, we've saved it,"
he said of AirAsia, which grounded most of its fleet during the
pandemic. "We are refloating it and listing it as an independent
listed vehicle."
    The AirAsia Aviation business would raise capital, possibly
in tandem with a dual listing in the United States or elsewhere
in Asia, Fernandes said, and pursue growth opportunities like
setting up new airlines in places such as Vietnam and Cambodia.
    Capital A, in turn, could look to list its aviation services
business, including maintenance and catering, in Singapore where
rivals like Singapore Technologies Engineering  STEG.SI   and
SATS  SATS.SI  could serve as comparable companies, he added. 
    AirAsia expects to have 140 planes out of its fleet of 205
back in service by the end of the year, down from an August
estimate of 160, as it faces maintenance capacity bottlenecks
after more than two years of groundings, Fernandes said.
    Capital A will release its third-quarter financial results
on Wednesday. Fernandes said a recent decline in the oil price
and strengthening of local currencies was helping to improve the
company's outlook.
    Capital A shares have fallen 25% since the start of the
year, underperforming rivals with stronger balance sheets such
as Singapore Airlines  SIAL.SI  and Cathay Pacific Airways
 0293.HK , which have posted gains of 9% and 21% respectively.
    Fernandes said the distressed-company status had a "major
impact" on the airline's share price by reducing investor
confidence, which he hoped to restore through the restructuring
plan.  
 (Reporting by Jamie Freed in Sydney. Editing by Gerry Doyle)
 ((Jamie.Freed@thomsonreuters.com;))