MONEY MASTER

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...

  AirAsia X Bhd (AAX) shareholders have voted 99.08% in favor of acquiring AirAsia Bhd and AirAsia Aviation Group Ltd from Capital A Bhd for RM6.8 billion . This deal includes over 200 existing aircraft and 361 future aircraft orders , enabling AAX to expand across long-, medium-, and short-haul segments , according to AAX Chairman Datuk Fam Lee Ee . During the extraordinary general meeting (EGM) , shareholders also approved additional proposals, including the issuance of free warrants , a private placement to raise RM1 billion , and a share capital reduction . The acquisition is expected to be finalized by the end of the year, pending court and regulatory approvals. AAX CEO Benyamin Ismail stated that the group's focus will be on sustainable expansion and operational excellence to maintain its leadership in the low-cost market . Meanwhile, Capital A CEO Tan Sri Tony Fernandes expressed his excitement over the approval, stating that the company is nearing the resolution ...

Capital A Bhd , the holding company of low-cost carrier AirAsia , annouced on Tuesday that it is confident of exiting its Practice Note 17 (PN17) status by December 2024 , earlier than the previous target of mid-2025. CEO Tan Sri Tony Fernandes shared the update following the company’s successful shareholder approval for the disposal of its aviation business to AirAsia X Bhd (AAX) . The next step in the process is the approval from AAX shareholders , with an extraordinary general meeting scheduled for Wednesday. If approved, Capital A will move into positive equity and submit its regularisation plan to Bursa Malaysia . Fernandes highlighted the market’s positive reaction to the disposal, with Capital A’s shares rising 46% since the announcement in April. The deal involves AAX acquiring Capital A’s aviation business for RM6.8 billion , with Capital A receiving RM3 billion in AAX shares and AAX assuming RM3.83 billion in debt from the aviation business. At Tuesday’s noon brea...

Capital A Bhd shareholders have overwhelmingly approved the RM6.8 billion disposal of its aviation business to AirAsia X Bhd (AAX) at an extraordinary general meeting (EGM) on Monday. The resolutions were passed with 99.97% of attendees voting in favor. This disposal is a key part of Capital A’s plan to exit its Practice Note 17 (PN17) status, and now awaits approval from AAX shareholders at their upcoming EGM on Oct 16 . Capital A CEO Tan Sri Tony Fernandes expressed optimism on LinkedIn , calling it a "great day" for the group after navigating the challenges posed by Covid-19 . He emphasized that if AAX shareholders approve the deal, it would create a "very powerful aviation group" and position Capital A for significant growth. The deal includes the distribution of 73.33% of AAX shares that Capital A would receive from the disposal to its shareholders, a resolution also passed with 99.97% approval. Capital A aims to achieve a clean balance sheet and sub...

AirAsia X Bhd (KL) has issued a comprehensive circular outlining its RM6.8 billion acquisition of Capital A Bhd's (KL) entire equity stake in AirAsia Aviation Group Ltd (AAAGL) and AirAsia Bhd (AAB) , for shareholders' review ahead of the extraordinary general meeting set for October 16. The proposed acquisition is part of a strategic move to create a focused aviation powerhouse , integrating seven airlines across Malaysia, Thailand, Indonesia, the Philippines, and Cambodia . The goal is to position the new aviation group to cover short-, medium-, and long-haul air travel services , tapping into the growing demand for international travel. According to AAX’s statement, the acquisition will significantly enhance the airline group’s competitive edge and make it more resilient and adaptable in a rapidly recovering global aviation market . AAX CEO Benyamin Ismail emphasized that the synergies with Capital A’s ecosystem —including digital services, ground handling, and in-flight...

AirAsia, a low-cost airline under Capital A Bhd, has commenced 14 weekly flights from Subang Airport in Selangor to Sabah and Sarawak using Airbus A320 narrow-body aircraft, starting from August 30. This marks a return to Subang Airport for AirAsia, which initially launched its operations there 24 years ago. Key Highlights: Return to Subang Airport : Reintroducing narrow-body aircraft at Subang Airport is part of a broader initiative to modernize the airport into a vibrant city terminal catering to business travelers, as explained by Capital A CEO Tan Sri Tony Fernandes. The move is expected to enhance connectivity within Malaysia and the region. Expansion Plans : Fernandes expressed optimism about the growth potential of Subang Airport, anticipating it will become a popular hub for travelers. AirAsia plans to rapidly expand its operations from Subang, leveraging its status as Malaysia's largest airline by capacity, with 40 domestic routes and 1,860 return weekly flights by the end...

  Budget carrier AirAsia Bhd has secured a significant US$443 million (RM1.9 billion) dual-tranche private financing to refurbish planes that were grounded during the pandemic. This financing, structured as privately-placed bonds linked to revenue, is part of the airline's broader strategy to recover and expand its operations. Key Details: Financing Structure : The deal includes a US$200 million tranche provided by private credit funds Ares Management Corp and Indies Capital Partners Pte Ltd. This tranche is specifically allocated for refurbishing grounded aircraft to bring them back into service. The remaining US$243 million was secured from aircraft lessors to refinance lease liabilities. Deal Characteristics : The financing is secured by the sale of future airline tickets from AirAsia's key routes, reflecting a growing trend in Asia where private credit is becoming a serious alternative to mainstream lending due to its higher, floating rates of return. The private credit t...

Retain BUY recommendation with unchanged target price (TP) of RM3.85 Highlights/ Comments AirAsia has updated its fleet plan for 2017 with an expected growth of 26 net additional aircrafts (+15.9% yoy). Fleet expansion is expected to continue until 2028, with an average of 19-20 aircrafts per annum. New deliveries of A320NEO (15% fuel saving) has begun since Sep 2016, while the A321NEO (20% fuel saving) will begin in 2019.  The planned double digit capacity growth is in view of the market showing signs of strong demand growth (especially traffics on North Asia sector). Given a rational market condition in all countries, management does not expect competitive pressure on its yields in 2017. As a matter of fact, management has seen strong forward bookings in 4Q16 (load factor of 90%) and in early 2017. Recently, BNM has given the approval on foreign funding for the placements of additional 20% shares (in AirAsia) by major shareholders. The exercise is expected ...

Maintain neutral call with target price (TP) of RM2.50 AirAsia reported net profit of RM353.9m for its 3QFY16, compared to a net loss of RM405.7m. Excluding forex loss of RM2.7m, tax incentives of RM118.7m and gain on disposal of its aircraft of RM84.2m, its core net profit for the quarter was RM391.1m (3QFY15: core net profit of RM158.1m). For 9MFY16, AirAsia core net profit was RM1.18bn, which came in within our but above consensus full year expectations, accounting for 72.5% and 85.7% respectively. The improvement in 3Q results was due to higher passenger seat sales and aircraft operating lease income by 9.3% YoY and 29.3% YoY respectively, as well as lower fuel expenses by 20.6% YoY. We maintain our  Neutral  call on AirAsia, with target price of  RM2.50  pegged on 8x FY17F EPS. Our target price is based on FY17F enlarged share capital that includes the proposed share placement to Tune Live Sdn Bhd. 3QFY16 revenue was RM1.69bn (+11.3% YoY),  c...

Maintain overweight on aviation sector Aviation industry Last week, it was reported that the Transport Minister has confirmed the upward revision for PSCs, which will be implemented for all airports in Malaysia starting 1st January 2017.  While rates are not firmed up yet, tentative new rates suggest all airports will have the same structure with International and Domestic PSCs at RM73 and RM11 in addition to a new segment known as ASEAN routes at RM35. We are positive on the tentative rates, as they indicate 10% higher PSC revenue for AIRPORT translating to a potential 25% upgrade to our FY17E earnings. While the magnitude of hike might appear huge for AIRASIA operating in KLIA2, we note that the effective impact would be minimal as most of AIRASIA’s international flights are flown towards ASEAN countries, which will fall under the new RM35 ASEAN segment – allowing them to keep their competitive pricings. We upgrade AIRPORT’s FY17E earnings by 25% on the back of a 1...