SEPANG (March 10): Capital A Bhd (KL:CAPITALA) said on Monday the low-cost carrier won’t be dishing out dividends anytime soon, to conserve cash for growth.
It would take at least three to four years before Capital A considers resuming dividend payments following the completion of the RM6.3 billion restructuring exercise, chief executive officer Tan Sri Tony Fernandes said at a media briefing.
“My priority for Capital A companies is growth,” he said. “Whatever cash we generate will be reinvested.”
WATCH: No dividends anytime soon, says Capital A
Capital A is confident that it would exit the Practice Note 17 status by May this year once the restructuring plan receives court approval. A key part of the restructuring involves the sale of its short-haul airline business to AirAsia X Bhd (KL:AAX).
That will leave Capital A to focus on six non-aviation businesses such as air cargo Teleport Everywhere Pte Ltd, maintenance services Asia Digital Engineering Sdn Bhd (ADE), financial technology Big Pay Pte Ltd, in-flight catering Santan Food Sdn Bhd, super app Move Digital, and its capital brand Abc International.
“ADE currently has 16 maintenance lines, but I believe we should have 32 to 40,” Fernandes said. “The same approach applies to Teleport, Santan, Move, and our other businesses.”
Fernandes noted the company would have to reduce debt accumulated during the pandemic. “Once we have cleared that, we will look at dividends, which will take between three and four years,” he said.
Last year, Capital A sank into the red with a net loss of RM475.11 million while earnings before interest, tax, depreciation and amortisation (Ebitda) came in at RM3.42 billion. The company, however, is now targeting RM4 billion in non-aviation revenue with an Ebitda of RM600 million.
Meanwhile, its aviation segment aims for RM24 billion in revenue, an Ebitda of RM4.8 billion, and a 5% net operating profit margin, assuming full fleet deployment.
Looking ahead, Fernandes indicated that each of the six non-aviation units would eventually be listed independently though the company would explore private placements before any initial public offerings.
Capital A shares stood at 83 sen, up one sen or 1.22% during the noon market break on Monday, giving the company a market capitalisation of RM3.6 billion.