Tony Fernandes, CEO of distressed Malaysia-based Air Asia Group which recently renamed itself Capital A is currently driving an effort to get funding for new operations of the carrier group.
The company is seeking upwards of one Billion Ringgit ($238M) in order to secure and expand operations of the carrier conglomerate, some of whose airlines such as Air Asia X and Air Asia Japan have already faltered.
Air Asia which mainly focused on connecting destinations within Asia has been hit particularly hard since to Coronavirus pandemic hit with borders across the continent being virtually shut for purposes of common travel for almost two years now.
CEO Fernandes and Air Asia have also taken a huge reputational hit, especially in Malaysia as they tried and weasel their way out of refunding consumers for canceled tickets and offered creditors 0.5% on their debt.
We reported about this late last year:
Malaysia’s AirAsia X Offers Creditors To Pay Just 0.5% Of Their $8.1 Billion Debt
Since then the Air Asia Group has undergone a more or less superficial transformation that mainly concerned their name. No idea who came up with Capital A, is that supposed to be creative!?
Two weeks ago Reuters reported that Air Asia X and the creditors have come to an agreement regarding a restructuring plan:
Most of AirAsia X Bhd lessors support a restructuring plan, and the Malaysian airline has received interest from potential investors for fundraising after reorganization, court documents filed this month show.
In emails attached to the court filings, supportive lessors said they wanted to continue discussions with the budget airline and potential new investors, seeking more equitable terms and new commercial arrangements.
The affidavits come after more than a dozen creditors filed to intervene with its proposed court-supervised restructuring, with lessor BOC Aviation Ltd and airport operator Malaysia Airports Holdings Bhd arguing that AAX is “hopelessly insolvent”.
Planemaker Airbus SE also filed a lawsuit last month saying it could lose more than $5 billion worth of aircraft orders if the low-cost, long-haul carrier proceeded with the plan.
AAX said it had received 10 letters from Malaysian and Singaporean corporations and high net worth individuals indicating interest to participate in its proposed fundraising exercise, according to an affidavit.
The 10 includes Tune Group Sdn Bhd, owned by AirAsia Group Bhd co-founders Tony Fernandes and Kamarudin Meranun. Tune is the largest AAX shareholder, with a 17.83% stake.
AAX said it also received interest from a public-listed financial group and the subsidiary of another, both preferring to be unnamed.
AAX, an affiliate of AirAsia Group, last month said it planned to raise up to 200 million ringgit ($49.49 million) by issuing shares to new investors after its debt restructuring. …
And now they’re trying to collect fresh cash in order to restart at some point in the future.
NIKKEI Asia reports that Tony Fernandes is doing the rounds right now, trying to entice investors to lend/invest money to Capital A.
Capital A, the holding company of low-cost airline AirAsia, plans to raise over 1 billion ringgit ($238 million) to fund working and operating expenditures, and will also set up low-cost airline operations in two Southeast Asian countries this year, co-founder and group CEO Tony Fernandes said on Friday.
Speaking at the renaming of AirAsia Group to Capital A in Kuala Lumpur, Fernandes said its cargo arm, Teleport, recently closed a fundraising of 200 million ringgit, while its superapp business is soon to conclude a cash call of up to 200 million ringgit. The airline itself will continue to be known as AirAsia.
“So, overall I think it’s going to be more than 1 billion ringgit,” said Fernandes.
The airline has so far raised 2.5 billion ringgit, including a 500 million ringgit federal government-guaranteed loan, under a framework introduced to assist companies directly affected by the coronavirus pandemic. But more funds are needed for AirAsia to maintain its workforce of some 20,000 employees and fuel digital expansion as countries remain cautious in reopening international borders and tourism.
Fernandes did not name the countries targeted for the new airline operations, but said negotiations are ongoing and announcements would be made soon. Besides Malaysia, AirAsia has a local presence in Thailand, the Philippines and Indonesia.
“We want to be truly an ASEAN airline, where the growth is,” he said, referring to the Association of Southeast Asian Nations, which has 10 members.
On the renaming of the company from AirAsia to Capital A, Fernandes said the new moniker reflects the company’s wide range of businesses. …
“Essentially Capital A is an investment company with a broad portfolio of businesses which all deliver the best value at the lowest cost, supported by strong data built up over two decades,” he added.
AirAsia’s net loss ballooned in 2020 to 5.1 billion ringgit from a 315.8 million ringgit loss in 2019 as the pandemic disrupted travel worldwide. Revenue also plunged from 11.9 billion ringgit in 2020 to 3.1 billion in the previous year. …
The question will be if there is a place for Air Asia’s group of airlines spread all over the continent in the short and medium term. Air traffic has pretty much collapsed since borders are still closed for tourism and business travel. By the time borders reopen to let people travel without restrictions such as quarantine again, various national airlines that have likewise been hit by Covid are under pressure to start flying again.
This includes Malaysia’s own national carrier Malaysia Airlines as well as embattled Thai Airways, Garuda Indonesia, and Philippine Airlines.
Domestically, Air Asia Thailand has been doing rather well considering the circumstances and the demise of THAI which has stopped all domestic operations until recently. Internationally that’s another story.
Conclusion
Air Asia Group has changed its name to Capital A and will essentially be an investment company as per the vision of company founder Tony Fernandes. The firm is now seeking to raise substantial capital to bankroll a restart of their aviation operation in a post-Covid-19 world whenever that might be.
It might largely depend on the question, if an Air Asia style budget carrier for international traffic is needed and even relevant until things get back on track which might very well take five years or longer.
Air Asia has lost a lot of its former shine and glory considering the carrier’s actions in Malaysia involving refunds. At some point, the Malaysian regulator MAVCOM has reminded them that consumers who bought tickets with the airline aren’t akin to investors who can be a 0.5% take it or leave it deal. Enforcement action was threatened until the carrier eventually caved in. Would you still buy more tickets from them?
