KUALA LUMPUR, March 14 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the week slightly higher, in line with regional indices despite the weaker performance on Wall Street overnight. At 5 pm, the FBM KLCI rose 2.12 points or 0.14 per cent to 1,512.15 from Thursday’s close of 1,510.03. The market bellwether opened 10.08 points lower at 1,499.95, and moved between 1,493.29 and 1,516.25 throughout the day. On the broader market, gainers outpaced losers with 680 to 292, while 437 counters were unchanged, 1,009 untraded, and 13 suspended. Turnover was marginally lower at 3.24 billion units worth RM2.5 billion from 3.25 billion units worth RM2.90 billion on Thursday.
Key Highlights:
- Tony Fernandes sees 2025 as a "rebuilding year" as Capital A restructures to exit PN17 status.
- Sale of AirAsia’s aviation business to AirAsia X (AAX) for RM6.8 billion is critical to resolving Capital A’s financial struggles.
- Regulatory approvals and court rulings pending, with a crucial hearing set for late March.
- Capital A seeks to cut costs, optimize routes, and restart 14 grounded planes to reduce cash burn.
- Saudi Arabia’s PIF rumored to invest RM1 billion in AirAsia Group Bhd (AAGB) as part of the restructuring deal.
- BigPay, Capital A’s fintech unit, is struggling, and a partner is sought to take over leadership.
Tony Fernandes’ Vision: A Year of Rebuilding
Capital A Bhd, the parent company of AirAsia, is at a crucial turning point in its financial recovery. CEO Tan Sri Tony Fernandes has laid out an aggressive plan to restore profitability, exit PN17 status, and rebuild the airline’s competitive edge in 2025.
“We’re almost there,” Fernandes said in an interview, referring to ongoing regulatory discussions and court approvals required for its aviation restructuring plan. The goal? Transform Capital A into a leaner, more profitable company while ensuring AirAsia’s continued dominance in the low-cost aviation sector.
The RM6.8 Billion Lifeline: Selling AirAsia’s Aviation Business to AAX
The core of the restructuring plan involves selling Capital A’s short-haul airline business to AirAsia X (AAX) in a share-and-debt deal worth RM6.8 billion.
Why This Matters:
✅ Helps Capital A exit PN17 status, which has weighed on investor confidence.
✅ AAGB (AirAsia Group Bhd) will replace AAX as the listed aviation entity, with Capital A focusing on non-aviation businesses.
✅ The deal includes:
- RM3 billion worth of AAGB shares
- RM3.8 billion in debt novation✅ Target completion: April 2025 (subject to court approval and regulatory sign-offs).
Challenges: High Costs, Fleet Shortages & Regulatory Delays
Despite optimism, Capital A faces significant challenges:
🛑 Aircraft Shortages:
- 14 AirAsia planes remain grounded, costing US$4.9 million per month in leasing fees.
- Each plane costs RM40 million to return to service due to maintenance and regulatory costs.
- Fernandes’ top priority is getting these planes back in operation to boost revenue.
🛑 High Operating & Finance Costs:
- Capital A is carrying RM6.06 billion in debt, including RM3.82 billion in USD-denominated loans.
- Finance costs hit RM866.55 million in the first 9 months of 2024 alone.
- Plans to refinance debt in local currencies to cut costs and improve earnings.
🛑 Regulatory Approvals & Market Uncertainty:
- Court hearing for capital reduction exercise set for March – critical for distributing AAGB shares to Capital A shareholders.
- Bursa Malaysia’s PN17 regularization plan approval still pending.
Saudi Wealth Fund (PIF) Tipped to Invest RM1 Billion in AirAsia Group
🚀 A key piece of the restructuring puzzle is a RM1 billion private placement for AAGB.
Sources suggest that Saudi Arabia’s Public Investment Fund (PIF) may take a 24.64% stake in AAGB via this placement, making it the single largest shareholder.
PIF has been aggressively expanding into aviation, recently investing in Heathrow Airport (UK) and launching Riyadh Air.
👉 Fernandes did not confirm PIF’s involvement but hinted that a major investor is nearly finalized.
👉 The RM1 billion funding is needed for:
- Aircraft acquisitions & pre-delivery payments (RM450m - RM550m).
- Prepayment of AirAsia’s term loan (RM300m).
- General working capital (RM104.5m - RM204.5m).
Cost-Cutting & Strategic Focus for 2025
Fernandes emphasized several initiatives to reduce costs and increase efficiency:
✈️ Route Optimization by April – focusing on high-profit routes in China, India, and ASEAN.
🔧 Asia Digital Engineering (ADE) – expanding maintenance, repair, and overhaul (MRO) services to cut fleet servicing costs.
📦 Teleport (air cargo) – expanding partnerships to boost revenue.
💳 BigPay (fintech arm) – seeking a strategic partner to lead the struggling digital wallet business.
BigPay: From Rising Star to Struggling Business
BigPay, Capital A’s fintech venture, was once seen as a strong e-wallet challenger. However, tough competition and lack of funding have hindered its growth.
❌ Recent CEO & executive departures highlight internal struggles.
❌ Capital A lacks resources to invest in BigPay’s expansion.
✅ Fernandes is seeking a major financial partner to take over leadership while Capital A retains a minority stake.
Market & Investor Sentiment
💰 Capital A’s Stock Performance:
- Closed at 87.5 sen, down from RM1.09 in November 2024.
- Market capitalization: RM3.79 billion.
- Analyst Ratings: 4 "BUY," 6 "HOLD," 1 "SELL" (TP: RM1.09).
💰 AirAsia X’s Stock Performance:
- Closed at RM1.73, below analyst target price of RM2.58.
- Market capitalization: RM773 million.
📊 Investor Concerns:
- Delays in PN17 exit & restructuring approvals.
- High debt levels & financing costs.
- Execution risk in restoring AirAsia’s fleet and optimizing routes.
Final Thoughts: Capital A’s Road Ahead
📌 Fernandes sees 2025 as a turning point:
✅ Exiting PN17 will boost investor confidence.
✅ Returning grounded planes will increase capacity and revenue.
✅ Cost-cutting & refinancing will improve profitability.
✅ New capital from PIF (or another investor) will stabilize AAGB.
📌 Long-term vision for 2026+:
💡 Fernandes wants AirAsia to be one of the most profitable airlines globally.
💡 Expanding non-aviation businesses (ADE, Teleport, AirAsia Move) to diversify revenue streams.
The Bottom Line: 🚀 If Fernandes can execute the restructuring, secure fresh funding, and restore operations, Capital A is well-positioned for a strong comeback. But delays in regulatory approvals and external economic pressures remain key risks.
Comments
Post a Comment