AirAsia plans new listing with $1.4 billion merger of units

AirAsia announced a 6.8 billion ringgit ($1.42 billion) deal to create a new, listed entity that will simplify its operations by combining its various airline units. 

As part of the merger, listed long-haul carrier AirAsia X Bhd. will acquire AirAsia Aviation Group and AirAsia Berhad from sister company Capital A Bhd., according to an announcement on Thursday. AirAsia X will subsequently be delisted, with a consolidated aviation company called AirAsia Group being listed instead, the filing said. 

The new company plans to undertake a private placement to raise 1 billion ringgit as part of the process, which is pending approval from Bursa Malaysia. The proceeds will used to fund new planes and parts, service debt and for general working capital needs. 

The transaction will allow Capital A to ultimately become a holding company for all the group’s non-aviation businesses, as well as remove liabilities associated with the airline units. The company plans to eventually list its non-aviation business units — such as online travel platform Move and logistics company Teleport — both of which have reported strong growth since the pandemic. 

AirAsia operates units in five southeast Asian countries currently, with operations in Cambodia commencing next week. It is also seeking to start units based in Singapore and Vietnam, and anticipates all of its fleet will be back in operation by mid-year. 

Capital A expects to record a pro-forma gain of 10.76 billion ringgit from both disposals, it said in a separate filing. The Malaysian stock exchange currently classifies Capital A as a financially distressed company.