An AirAsia Airbus A320.
Capital A—the parent of budget carrier AirAsia that’s owned by tycoons Tony Fernandes and Kamarudin Meranun—is merging its various airline affiliates across Southeast Asia in a deal valued at 6.8 billion ringgit ($1.4 billion).
Under the deal, Capital A will divest its aviation business across the region into its long-haul carrier AirAsia X, creating a new company to be called AirAsia Group, which will take over the listing status of AirAsia X on Bursa Malaysia, the holding company said in regulatory filing.
“The new aviation group will operate and provide a full spectrum of short, medium and long-haul low-cost air transportation services, with domestic flights and international flights from Malaysia, Thailand, the Philippines, Indonesia and Cambodia to numerous destination countries,” it said.
Fernandes, who delayed his retirement and signed a five-year contract to remain as CEO of Capital A, said the merger will drive growth and profitability for both its airline and non-aviation related businesses.
“The divestment facilitates clear distinction between Capital A’s main portfolio of businesses—the aviation group, digital businesses, and logistics plus aviation services— to optimize synergies across entities and unlock greater value for all stakeholders,” Fernandes said in a statement released on Friday.
Completing the deal is a major step toward restoring the group’s financial status. It hads ben deemend a financially distressed company in 2022 under the Malaysian stock exchange’s Practice Note 17 (PN17) after it auditor Ernst & Young had cast doubt on the group’s ability to continue as a going concern. Capital A returned to the black last year after four consecutive years of losses.
“We remain steadfast in our commitment to emerge successfully from PN17, propelled by our resilience and determination to navigate challenges,” Fernandes said.
Building AirAsia has been an adventure for Fernandes and cofounder Kamarudin. In 2001, they acquired the fledgling two-airplane outfit and transformed it into one of Southeast Asia’s biggest budget carriers. Air-Asia’s success catapulted Fernandes, who got his start at Richard Branson’s Virgin Music before joining Warner Music, where he worked for 12 years. He was named Forbes Asia’s Businessman of the Year in 2010 and put the partners on the list of Malaysia’s 50 Richest. But they dropped off in 2021 as the carrier’s share price tumbled after the pandemic disrupted travel around the world.
