KUALA LUMPUR, 8 January 2024 – Capital A Berhad, the leading aviation and travel services group and parent company of AirAsia, today announced that it has entered into a non-binding letter of offer with AirAsia X Berhad (“AAX”) for the proposed disposal of its aviation business, namely AirAsia Berhad (AirAsia Malaysia) and AirAsia Aviation Group Limited (AirAsia subsidiaries in Thailand, Indonesia, Philippines, and Cambodia). The strategic move is aimed at streamlining the group and facilitating a business-centric valuation of the separate entities, potentially unlocking greater value to shareholders.

CEO of Capital A, Tony Fernandes said, “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. We have been engaging committed investors who have expressed a strong preference for a pure aviation play. 

“To address this and to ensure a robust financial injection, we are 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, subject to the negotiation of a definitive share sale and purchase agreement and its completion. 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. 

We are confident that by separating the aviation business from Capital A, the non-aviation businesses within the group, which we feel are currently undervalued by the market, will also be recognised for their intrinsic value and potential. Capital A’s companies, including 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, complemented by shares in the enlarged aviation group under proposed shares distribution. 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.”

The decision to create a pure play entity aligns with market preferences, providing clearer understanding, valuation, and appreciation for the distinct strengths of both aviation and non-aviation businesses.

An announcement has been made on this through Bursa Malaysia. Following the completion of the aviation disposal, Capital A is committed to presenting a comprehensive PN17 regularisation plan by 30 June 2024. Capital A is dedicated to transparent communication and will provide all stakeholders with detailed information throughout this process.

*** END ***