Capital A to sell aviation business to AirAsia X

Aviation and travel services group and parent company of AirAsia, Capital A, is entering into a non-binding letter of offer with AirAsia X Berhad (AAX) for the proposed disposal of its aviation business, namely AirAsia and AirAsia Aviation Group Limited.

The move is aimed at streamlining the group and facilitating a business-centric valuation of the separate entities, potentially unlocking greater value for shareholders, it said in a statement. 

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“All businesses across Capital A have been thriving and we are ready to grow. 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," said Tony Fernandes, CEO of Capital A. "We have been engaging committed investors who have expressed a strong preference for a pure aviation play," he added. 

To address this and to ensure a robust financial injection, the company is 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, he explained. 

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. 

Capital A’s companies, such as Teleport (logistics), Capital A Aviation Services (MRO and Inflight), and MOVE digital, will also be raising capital, offering shareholders an uplift on their Capital A shares.

Following the sale of the aviation business, Capital A shareholders will become shareholders of the two strong listed companies. "We believe this move will bring greater clarity to investments, create a more focused shareholder base, and ultimately unlock value for our shareholders,” said Fernandes.

Following the completion of the aviation disposal, Capital A is committed to presenting a comprehensive PN17 regularisation plan by 30 June 2024, it said. 

The news comes shortly after Capital A joined hands with Garuda Indonesia Group, the national flag carrier of Indonesia, as part of a strategic partnership to support the strengthening of the global aviation ecosystem post-pandemic.

The partnership between these two entities explores the network expansion across various business lines, including commercial airline services between AirAsia and Citilink and logistics services with Teleport and Garuda Indonesia Cargo. 

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