Monday 22 Apr 2024
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"I’ve never been this bullish before,” Fernandes, who started AirAsia 23 years ago, said.

(Feb 26): The aviation industry is experiencing a “purple patch” with demand for seats far outstripping capacity amid a long wait for new aircraft and a shortage of pilots further discouraging any fresh competition, Tan Sri Tony Fernandes, the co-founder of low-cost carrier AirAsia, said.

Malaysia-based AirAsia for its part is set to witness its “best-ever period” with most of the carrier’s 240 planes back in the sky and “airfares at their best,” Fernandes said during an interview near Kuala Lumpur’s international airport on Monday.

“I’ve never been this bullish before,” Fernandes, who started AirAsia 23 years ago, said. “Southeast Asia is going through a renaissance period of sensible economics, and that’s a good thing.”

On the back of that, AirAsia plans to raise as much as US$600 million (RM2.87 billion) in the coming months, Fernandes said, as he tries to pull off a merger between his two aviation businesses — long-haul carrier AirAsia X Bhd and short-haul airline AirAsia, which is currently a unit under Fernandes’ more diversified company Capital A Bhd. 

Tan Sri Tony Fernandes said AirAsia plans to raise as much as US$600 million (RM2.87 billion) in the coming months as he tries to pull off a merger between his two aviation businesses — long-haul carrier AirAsia X Bhd and short-haul airline AirAsia, which is currently a unit under Capital A Bhd.

Following the merger, which is expected to conclude mid-year, the new entity will look to raise up to US$400 million via selling equity, Fernandes said. Citigroup Inc and US advisory bank Evercore Inc have been appointed to lead the capital raising. A US$200 million revenue bond, securitised against revenue from new routes, is also expected to be finalised soon, he said. 

Fernandes said the merger of the two airlines will create a new firm called AirAsia Group that will subsequently take over AirAsia X’s listing on Bursa Malaysia. The company may also do away with its AirAsia X branding as the aviation businesses consolidate.

AirAsia has ambitions to expand its footprint from a predominately Asian airline to a global low-cost carrier with a more extensive network. It plans to start flying to Kazakhstan, its first route in Central Asia, later this year. 

Fernandes, who has previously spoken about succession at the company he founded, said on Monday that he would retain an advisory role at AirAsia Group following the merger. He’ll remain chief executive of Capital A, his other listed company that will ultimately hold all the non-aviation businesses he’s started.

Those include Teleport, a logistics company, and Move, an online travel agency that also operates a ride-hailing business. Move is finalising a US$30 million capital raising while Teleport has raised US$35 million in debt, he said. 

The company’s aircraft-maintenance arm, Asia Digital Engineering, has also managed to raise US$100 million, Fernandes said.

The Financial Times reported in October that Capital A is seeking to raise more than US$1 billion in debt and equity and list some of its businesses through a blank-cheque company in New York. The company said in November that it will seek a Nasdaq listing via a special purpose acquisition company merger with Aetherium Acquisition Corp.

“2024 will be a very good year. 2025 will be an amazing year,” Fernandes said. “There’s a lot of growth for us.”

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