Capital A Wins Court Approval for $1.4bn Capital Reduction

Capital A has secured approval from the High Court of Malaya to reduce its share capital by MYR5.5 billion (approximately USD1.4 billion), a key step in its efforts to clean up its balance sheet and exit Malaysia’s Practice Note 17 financial distress classification.

In a statement, the company said the court-approved capital reduction will allow it to eliminate accumulated losses and restore positive shareholders’ equity. Achieving positive equity is a central requirement for lifting PN17 status, which applies to listed companies facing financial distress under Bursa Malaysia’s rules.

Capital A said the regularisation plan will be formally completed once it files the sealed court order with the registrar of companies, a step it expects to complete by late January 2026. While the company anticipates that shareholders’ funds will turn positive once the capital reduction takes effect, the final removal of PN17 status will still be subject to regulatory confirmation.

The court decision follows the completion on January 16 of Capital A’s disposal of its aviation businesses, including AirAsia and the AirAsia Aviation Group, to sister company AirAsia X. That transaction was a cornerstone of the group’s restructuring strategy and involved AirAsia X issuing new shares to Capital A shareholders, as well as assuming MYR3.8 billion (USD937.2 million) in debt previously owed by Capital A to AirAsia Berhad.

Capital A group chief financial officer Teh Mun Hui described the court order as the final judicial milestone in the company’s PN17 recovery process. He said the group had focused on addressing underlying financial weaknesses by executing each step of the restructuring plan, including the aviation asset disposal, the distribution of AirAsia X shares to shareholders, and securing the necessary approvals to reset the balance sheet.

With the restructuring largely complete, Capital A is repositioning itself as a holding company focused on non-aviation businesses. These include aircraft maintenance provider Asia Digital Engineering, logistics arm Teleport, and the AirAsia MOVE digital platform, which covers travel, lifestyle, and financial services. The group believes these businesses offer scalable growth opportunities without the capital intensity and volatility associated with airline operations.

Industry observers say the capital reduction and asset disposal together represent a decisive shift in Capital A’s strategy, allowing it to distance itself from legacy airline losses while focusing on technology, engineering, and logistics ventures. If regulatory approval to exit PN17 status is granted, Capital A would regain greater flexibility in capital markets and corporate decision-making.

The company said it will continue to engage with regulators and Bursa Malaysia as it works toward formally concluding its regularisation process and stabilising its long-term financial position.

Related News: https://airguide.info/category/air-travel-business/airline-finance/

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com