KUALA LUMPUR (April 13): AirAsia X Bhd's (AAX) share price continued to drift lower to its intra-day low of RM1.24 on Thursday (April 13) following news that the medium-haul low-cost airline needs more time to submit its regularisation plan involving the acquisition of the aviation business owned by its associate Capital A Bhd.
According to an analyst, the airline said documentation has been slow due to the Ramadan month and with Hari Raya celebrations around the corner.
“They will still try to make it (submit the regularisation plan) before [the release of financial] results (for the first quarter of 2023) in late May,” the analyst told The Edge.
At the closing bell on Thursday, AAX shares fell eight sen or 5.93% to RM1.27 per share. Trading volume was 16.51 million — the highest since April 4 at 28.22 million.
The aviation stock, which more than doubled from a low of 60 sen year to date, has fallen 25% from this year’s peak of RM1.68 — the highest since pre-pandemic on Nov 13, 2019.
The airline announced on Wednesday that it is seeking an extension to submit its regularisation plan from the April 28 deadline to July 28.
This would be the second extension should Bursa Malaysia approve the application. The original deadline was in October 2022.
Meanwhile, Capital A, which is also AAX’s sister company, has its deadline on July 7.
Capital A shares also fell two sen or 2.47% to close at 79 sen apiece, with 44.44 million shares traded. The counter was trading between 78 sen and 80.5 sen intraday.
Nevertheless, an analyst told The Edge that the drop in the share price of AAX and Capital A was “nothing other than a knee-jerk reaction”.
The regularisation plan is expected to see Capital A injecting its aviation business into AAX via an issue of shares by the low-cost carrier.
Valuation of each companies’ assets, particularly goodwill, is believed to be the main issue that both sides need to iron out.
Capital A fell into Practice Note 17 (PN17) status on Jan 14, 2022, less than three months after AAX was categorised as a PN17 firm in October 2021.
The large accumulated losses resulted in negative shareholders equity for both companies.