Capital A is looking to raise additional funds with an IPO for Philippines AirAsia (Z2, Manila Ninoy Aquino International) and a Indonesian share placement following its back-door listing in the United States later this year, according to CEO Tony Fernandes.
"We might use a public company in Indonesia to raise some more capital through a placement," he told the Wall Street Journal, "and we will look to list the Philippines entity, floating 20% or 30% of its shares." Fernandes has previously mulled floating Philippines AirAsia.
Capital A, via its AirAsia Aviation Group (AAAG) subsidiary, operates low-cost carriers throughout Southeast Asia, namely Philippines AirAsia, Thai AirAsia, and from May 2024, AirAsia Cambodia. A separate Capital A entity, AirAsia Bhd, operates AirAsia.
Late last year, ch-aviation reported that Capital A intended to list on the Nasdaq stock exchange in New York in 2024 after finalising a business combination agreement with special purpose acquisition company Aetherium Acquisition Corporation. That agreement was finalised earlier this month. A listing would make it easier for Capital A to tap US funds and, according to the WSJ, allow the entity to escape the Malaysian bourse's "heightened regulatory scrutiny."
Separately, Capital A expects to close a USD200 million bond later this month. In January, it also announced that AirAsia X (D7, Kuala Lumpur International) will acquire 100% stakes in AirAsia Bhd and AAAG and merge the various brands into a single entity, allowing Capital A to focus on its non-aviation businesses. However, Fernandes and his lower-profile business partner Kamarudin bin Meranu will still ultimately control the airline. Fernandes has said he expects that bringing all his airlines under one brand will create an equity windfall of around USD400 million.
The latest publicly available AirAsia X annual report, covering the 12 months to December 31, 2022, shows AirAsia Bhd, controlled by Fernandes and Meranu, owns 13.76% of AirAsia X Bhd and is its largest shareholder. Second-largest is RHD Capital Nominees, which holds a 12.57% stake on behalf of Tune Group, a Fernandes-controlled entity, while the third-largest shareholder, CIMSEC Nominees, owns a 5.26% stake, also on behalf of Tune.
Fernandes also said his airlines are generating revenues equal to or exceeding pre-pandemic levels. However, the costs of returning aircraft to service, higher depreciation, and finance costs are resulting in operating losses, though those losses are expected to start narrowing. Capital A remains a Practice Note 17 (PN17) status company, which Bursa Malaysia applies to entities it considers to be in financial distress. There is a "disconnect", Fernandes said, between the status and "what is going on on the ground." The US listing and easier access to US capital will form part of Capital A's regularisation plan it must submit to Bursa Malaysia, after which it hopes to have PN17 lifted.
Fernandes did not provide a firm timeline for any fundraising activities in the Philippines or Indonesia, saying only that if it occurs it would happen after the merger of AirAsia and AAAG, the US listing, and exiting PN17 status.