AirAsia and the AirAsia Aviation Group of airlines will be merged into AirAsia X

Source : World Airline News / Images by : Gan Yung Chyan, KUCINTA SETIA

Images : Researcher's Pictures

Capital A (AirAsia Aviation Group) has announced it is consolidating its aviation businesses as it reports a third quarter loss.

Capital A, controlled by Tony Fernandes and Kamarudin Meranun, is now planning to consoildate its aviation businesses under the long-haul AirAsia X operation.

Images of current Members of AirAsia Aviation Group / Capital A : AirAsia Berhad, Thai AirAsia, AirAsia Indonesia, Philippines AirAsia, Thai AirAsia X

Images of AirAsia India, no longer part of AirAsia Aviation Group, as it is merged into Air India Express : Researcher's Pictures

Under the plan, detailed below, AirAsia and the AirAsia Aviation Group will be merged into AirAsia X to shore up the financially-suffering long-haul subsidiary.

AirAsia X in October was declared a financially destressed company under Bursa Malaysia’s Practice Note 17 (PN17) after its auditor Ernst & Young expressed deep concerns on AirAsia X’s financial ability to continue as a going concern.

This move will shore-up the AirAsia X operation.

Capital A issued this statement:

"Capital A Berhad (formerly known as AirAsia Group Berhad) (Capital A or the Group) reported its financial results for the quarter ended September 30, 2022.

"The Consolidated Group posted 3Q2022 revenue of RM1,961 million, up 563% year-on-year (“YoY”) and 34% higher quarter-on-quarter (“QoQ”). The Group recorded a positive EBITDA of RM72 million, its second consecutive quarterly EBITDA profitability since the pandemic and a marked turnaround from an EBITDA loss of RM276 million a year prior. The result is underpinned by EBITDA profitability from each of the Group’s four biggest business segments by revenue, namely the airlines businesses under AirAsia Aviation Group (AAAGL); maintenance, repair and overhaul (MRO) business Asia Digital Engineering (ADE); logistics arm Teleport; and airasia Super App."

"In 3Q2022, the Group reported net loss of RM1.1 billion primarily due to one-off items and unrealised foreign exchange losses. These include non-operating aircraft depreciation and interest expenses of RM239 million, foreign exchange losses of RM364 million (of which RM349 million was unrealised), 76% of share of losses from associates of RM227 million which is attributed to forex losses and one-off maintenance expenses of RM62 million. Excluding these one-off items, the net operating loss amounted to RM322 million."

The airline group stated its merger plan:

"The plan envisaged will entail the disposal of Capital A’s aviation businesses, namely AirAsia Berhad and AirAsia Aviation Group Limited, to AirAsia X Berhad (AAX). The shares consideration, received in exchange for the disposal, will then be distributed to Capital A shareholders, so that they will retain direct interest in the aviation businesses via AAX, following the restructuring. In essence, via this scheme, Capital A’s shareholders’ value will be preserved. Capital A will be rebranded as an aviation services and digital group, post the disposal and distribution exercises. We envision a separate spin-off listing in the future for the aviation services businesses of Capital A once the PN17 status is resolved.

"Despite the tightening global economy, all our core businesses are gaining traction and growing market share in their respective industries. As we finalise the proposed PN17 regularisation plan, we are confident that the Group will continue to deliver profitability and strengthen our cash flow post-regularisation."

Image : 959499

Image of AirAsia X : Researcher's Picture