Capital A Eyes $1 Billion Raise in Ambitious Plan for AirAsia and Beyond
Malaysia’s investment holding company, Capital A, led by CEO Tony Fernandes, is reportedly set to embark on a substantial fundraising endeavor, aiming to secure over USD 1 billion in debt and equity. The plan involves utilizing a special purpose acquisition company (SPAC) named Aetherium Acquisition, listed on the Nasdaq, to facilitate the listing of several businesses in 2024. Among the entities to be listed is a venture extending the renowned AirAsia brand into new markets and catering to potential airline startups.
While Capital A has yet to officially confirm this liquidity-raising initiative, the move is anticipated to test investor appetite for Southeast Asian low-cost airlines. Capital A’s diverse business model spans the digital, aviation services, and logistics sectors. Despite being classified as financially distressed (PN17) by the Malaysian Stock Exchange (Bursa Malaysia) since 2021, Capital A is actively working towards exiting this status.
Recently, Bursa Malaysia rejected a bid by AirAsia X to exit PN17 status, adding to the complexities faced by entities under the Capital A umbrella. The proposed fundraising serves as a strategic move to fuel growth, particularly in light of Capital A’s pivotal role in various sectors.
In its Q3 operating statistics, Capital A highlighted the performance of its airlines, including AirAsia Malaysia, Thai AirAsia, Indonesia AirAsia, and Philippines AirAsia. The airlines recorded an impressive average load factor of 89%, transporting 14.7 million passengers within the three months ending September 30, 2023. The statement emphasized the solid year-on-year growth, reflecting a 50% increase in passengers carried and a substantial recovery of 76% in passenger volume from the comparable 2019 period.
Capital A’s diverse portfolio includes MOVE Digital (formerly AirAsia Digital), logistics arm Teleport, MRO firm Asia Digital Engineering, inflight service provider Santan, and ground team company Group Team Red (GTR). Notably, the company has shifted its focus towards strategic partnerships with external entities, marking a significant departure from its previous business approach.
An illustrative example is the strategic partnership between the AirAsia Aviation Group and the Garuda Indonesia Group, involving interlining agreements and extensive collaboration between subsidiaries. Additionally, Teleport recently entered into a cooperation agreement with SF Airlines to optimize their networks for cross-border e-commerce demand.
Despite the thriving aviation arm, Capital A is vocal about its intention to reduce “dependence on aviation” and increase revenues from non-aviation sectors to constitute around 50% of its sales. The upcoming fundraising initiative is poised to be a transformative step for Capital A as it navigates the evolving landscape of Southeast Asian business and aviation.