SEPANG (Oct 15): Capital A Bhd's (KL:CAPITALA) aviation business is expected to achieve a 15% cost reduction upon completion of its merger with the long-haul low-cost carrier under its sister company AirAsia X Bhd (KL:AAX).
The merger, which will see both AirAsia's short- and medium-to-long-haul airlines’ business under one roof, is also expected to see a wider range of flight options, including more connections and new routes, according to Capital A chief executive officer Tan Sri Tony Fernandes.
Cost reduction, coupled with more flight frequencies, will likely translate into lower ticket prices for passengers, said Fernandes, who is a shareholder of both Capital A and AAX.
“The fares have been up and down, because of capacity — so with this combination, the number one goal is more flights at a lower price,” Fernandes told reporters at a press conference on Tuesday in conjunction with the company's extraordinary general meeting (EGM) on the corporate exercise.
Capital A on Monday secured minority shareholders' approval to dispose of its 100% stake in Malaysia AirAsia operating unit AirAsia Bhd, and AirAsia Aviation Group Ltd — which owns stakes in regional AirAsia arms — for RM6.8 billion to AAX in exchange for AAX shares, and Capital A's debt novation to AAX.
The deal is expected to be completed by end of this year, pending the approval from AAX's shareholders at its upcoming EGM on Wednesday (Oct 16).
By 2025, the low-cost airline plans to increase its operational fleet by 21% from 63 to 76 aircrafts, in order to support the 12% growth in daily flights (from 230 to 258) and boost its network by adding eight new destinations (from 98 to 106 destinations).
“This reactivation will significantly enhance the airline’s ability to meet the rising travel demand across established and emerging markets in Asia, Africa, and the Middle East,” Fernandes said.
In 2026 to 2027, AirAsia will focus on expanding into strategic markets in the Pacific and East Asia, with further growth planned in select regions of Africa, he noted.
By 2028, AirAsia aims to extend its reach in the Middle East, with future plans to explore opportunities in Europe and North America by 2030, he added.
Shares of Capital A were traded unchanged at 92.5 sen at 3.28pm, giving the group a market capitalisation of RM3.97 billion.
AAX was traded three sen or 1.71% lower at RM1.72, valuing the group at RM768.97 million.