KUALA LUMPUR (Nov 22): Shares in low-cost carrier group Capital A Bhd and AirAsia X Bhd (AAX) were actively traded on Wednesday morning, as AAX’s exit from its Practice Note 17 (PN17) status hinted at a possible separate, publicly-quoted aviation group that would be formed under Capital A's PN17 exit strategy.
The listed issuer status had been a stumbling block for any corporate exercise between both entities.
AAX’s share price, which jumped as much as 30 sen or 14.29% to RM2.42 from its last traded price of RM2.10 on Tuesday, closed at RM2.22 on Wednesday — still up 5.71% — for a market capitalisation of RM992.50 million, after 23.43 million shares were traded.
Earlier this year, Capital A chief executive officer Tan Sri Tony Fernandes had said the group was optimistic about its potential growth this year, following a strong rebound in travel demand post-Covid and expectation to shed its PN17 status by the end of this year.
To recap, Capital A fell into PN17, a categorisation for distressed entities, in January 2022.
The group previously announced that there was no plan to merge its two airline entities, AirAsia Bhd and AirAsia X Bhd (AAX), but that a separate publicly-quoted aviation group would be formed under its PN17 exit strategy by disposing of Capital A's aviation assets to AAX. The separate entity would then comprise six airlines — AirAsia, Thai AirAsia, AirAsia Indonesia, AirAsia Philippies, AAX, and Thai AirAsia X.
Fernandes had said the investment holding group, which is involved in aviation, logistics, lifestyle and financial services ventures, planned to submit its finalised regularisation plan to Bursa Malaysia as early as February.
“We can be out of PN17 status, definitely this year, and I hope much earlier than that. All of the consultants are now going through all the work,” he had said at an event in January this year.
Meanwhile, Maybank Investment Bank (Maybank IB) research has reaffirmed a "buy" call on AAX with a lower target price of RM3.40 (previously RM3.56).
The research house said the group's 3QFY2023 results were disappointing due to higher-than-expected jet fuel prices, which have since eased substantially.
However, Maybank IB expects fares to peak in the upcoming 4Q2023 and contribution from its associate Thai AirAsia X (TAAX) to improve starting next year.
AAX recorded a net profit of RM5.56 million for the third quarter ended September 30, 2023 (3QFY2023), marking the group's exit from PN17 classification.
The group had reported a six-fold surge in revenue amounting to RM 648.36 million, attributed to a recovery in international travel and the group’s available seat capacity over the past 12-month period.
Bursa Securities had resolved to allow the airline’s appeal for upliftment and from having to implement a regularisation plan, subject to the group announcing a net profit for 3QFY2023.
AAX, in its statement, said the upliftment from PN17 classification is a testament to the resilience and determination of the group, reflecting a significant milestone for the airline.
Meanwhile, its parent company, Capital A, was among the top actively traded stocks on Bursa on Wednesday.
The stock, which climbed as much as 5 sen to 88.5 sen from its last traded price of 83.5 sen on Tuesday, settled at 86.5 sen on Wednesday's close — up 3.59% — after 52.43 million shares were done. At its latest price, Capital A has a market capitalisation of RM3.65 billion.