KUALA LUMPUR (April 29): Shares of Capital A Bhd and AirAsia X Bhd (AAX) climbed further during Monday’s morning trading session, riding on a proposal announced last Thursday to merge the short- and long-haul airline operations of both companies.
AAX, which is buying AirAsia’s short-haul airline businesses currently parked under Capital A, saw its shares rise as much as 18 sen or 13.14% to RM1.55 in the morning session.
The counter is up 27% in the last five days. At noon break, the counter is still up 13 sen or 9.49% at RM1.50, valuing the group at RM670.61 million. Trading volume surged to 15.28 million shares, five times its two-month average of 2.69 million shares.
Shares of Capital A rose as much as six sen or 8.16% with 52.9 million shares traded, more than five times its two-month average volume of 9.28 million. At noon break, the counter is still up 5.5 sen or 7.48% at 79 sen, valuing the group at RM3.32 billion. The counter is up 17.9% in the past five trading days.
Year to date, AAX shares are still down 19.8%, while Capital A shares are down 4.2%.
Capital A is selling AirAsia Malaysia’s operating unit AirAsia Bhd (AAB) for RM3.8 billion worth of debt novation and AirAsia Aviation Group Ltd (AAAGL), which holds AirAsia’s overseas short-haul operations, for RM3 billion worth of shares at RM1.30 apiece.
The buyer — AirAsia Group or NewCo — will take over the listing status of AAX, and hence hold both the acquired AirAsia operations, and the long haul business currently under AAX.
Capital A has also proposed to distribute 73.33% of the NewCo shares to its shareholders via capital reduction (RM2.2 billion worth, based on transaction price of RM1.30 apiece).
An entitled Capital A shareholder would receive up to 397 NewCo shares for each 1,000 Capital A shares held, depending on Capital A’s shares based on the entitlement date.
Capital A plans to obtain Bursa Securities approval for the sale of its aviation business in June, and to announce its Practice Note 17 (PN17) regularisation plan that same month.
For Capital A, the non-cash deal would translate to gains in its books and strengthen its equity position, which is a key step to lift itself out of PN17 status. It will still own 18.39% in the aviation entity.
For AAX, the deal would see it transforming into AirAsia Group, a pure play aviation listed entity focusing on Asean and operating both the short- and long-haul aviation businesses.
The group's fleet will rise from 249 planes in 2024 to 377 planes by 2028, Capital A CEO Tan Sri Tony Fernandes said at a briefing on Friday. This will cater to an expected 117.5 million passengers, from 76.6 million expected this year.
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