AirAsia parent Capital A Berhad, intends to sell its aviation business to long-haul unit AirAsia X Bhd that will consolidate all cargo operations of the airline under a single brand.
The proposed deal involves the sale of AirAsia Berhad and AirAsia Aviation Group Ltd., which includes all airline units in Thailand, Indonesia, Philippines, and Cambodia, group chief executive Tony Fernandes told reporters without disclosing any deal value.
Tony Fernandes, CEO of Kuala Lumpur-based Capital A, announced at a press conference on Monday that AirAsia X has entered a non-binding letter of intent with his company for the proposed acquisition of its aviation businesses.
The plan will include the sale of AirAsia and AirAsia Aviation Group, which covers AirAsia units in the Philippines, Thailand, Cambodia and Indonesia.
Fernandes pointed out that the deal will help consolidate both long and short-haul airlines under the AirAsia brand.
Recovery path
Additionally, it also signaled the company's robust recovery trajectory after its upliftment from the Practice Note 17, PN17, status in November 2023.
"Today is a big day. Eventually, AirAsia X and AirAsia will be merged into one airline. We will not have two airlines anymore. This is a big step forward for Capital A. We will have a pure aviation group and slowly now we can say to the world what the plans are and shareholders will see the valuable assets we have built during this period," Fernandes told reporters.
"We need to raise funds for business expansion, but gaining access to capital has been challenging due to Capital A's PN17 status. We have been engaging committed investors who have expressed a strong preference for a pure aviation play," he said.
Fernandes did not disclose any additional details on the transaction but noted that the company is committed to presenting a comprehensive PN17 regularization plan by 30 June.
"How long will this process take for the All-Stars? Probably be three or four months and maybe five months before it is all done, including the signing of the Share and Purchase Agreement. I will be the CEO of Capital A. I am not leaving aviation anytime soon," he said.
For Capital A, creating a pure-play entity aligns with market preferences, providing a clearer understanding, valuation, and appreciation for the distinct strengths of both aviation and non-aviation businesses.