This article first appeared in The Edge Malaysia Weekly on March 24, 2025 - March 30, 2025

CAPITAL A Bhd’s (KL:CAPITALA) air logistics arm, Teleport Commerce Malaysia Sdn Bhd, is raising up to US$100 million (RM442.5 million) through an equity sale to expand its capacity, says the latter’s CEO Pete Chareonwongsak.

The company plans to raise at least US$75 million to enable it to buy the belly spaces of its partner airlines to have better control of the capacity it is going to need to carry two million parcels a day by the end of this year.

“We are using this money basically to buy the capacity from our airline partners. So, even if they say, ‘Look, I need to wait and see,’ we’ll say, ‘We’re so confident, we’ll buy it. And let us prove [that the demand is there]’,” Chareonwongsak tells The Edge in an exclusive interview.

“We will do it because we want to [get to two million parcels a day] this year. So, if it means we have to put our money where our mouths are, we will. We buy it and then generate revenue on it. So, it’s not like capital is going into a warehouse or more planes; it’s going into ensuring that our partners believe we’re serious.”

Apart from the airlines under AirAsia, Teleport’s partner airlines include Turkish Airlines, Etihad, Emirates, Qatar Airways, All Nippon Airways, Air New Zealand, Air India and Lufthansa, as well as VietJetAir Cargo, World Cargo Airlines, Garuda Indonesia Cargo and Tasman Cargo Airlines.

This would, notably, be the first capital-raising exercise done by Teleport through an equity sale. According to Chareonwongsak, the company has approached 81 potential investors and is likely choose two to become cornerstone investors for Teleport, alongside Capital A.

This means Capital A’s stake in Teleport will be diluted, but it will also set the stage for a listing of Teleport down the road. The maximum US$100 million fundraising exercise will finance Teleport’s capacity expansion until 2029, he says.

While he declines to discuss the company’s listing plan, he acknowledges that the new investors would eventually want to have an exit plan. As the funds to be raised will be enough for the company until 2029, Teleport might have to embark on another fundraising for that purpose.

It already has around US$20 million available for working capital purposes, says Chareonwongsak, but it will need US$50 million in 2025. This means the company will have to raise US$30 million for this year.

“This is a huge business. The addressable market, if you believe the reports that we had to go and commission for investors, is US$28 billion. So, we could be doing this for 30 years,” he says.

“To build a really great logistics company born out of Southeast Asia, you have to be willing to put in the time. We’re seven years old and we’ve done reasonably well. We’ve had Covid, which almost killed us, but here we are and we’re looking in good shape.”

Teleport was the largest non-aviation business of Capital A as at the financial year ended Dec 31, 2024 (FY2024). The company’s revenue reached RM1.1 billion in FY2024, having grown 49% year on year (y-o-y), ahead of Asia Digital Engineering’s (ADE) RM727 million and AirAsia MOVE’s RM553 million.

Teleport was still loss-making as at FY2024, however, although its losses have narrowed tremendously. During the year, its loss after tax narrowed by 494% to RM24 million, while its earnings before interest, taxes, depreciation and amortisation (Ebitda) surged 215% y-o-y to RM90 million.

With Teleport issuing shares to other investors, Capital A’s stake in the group is set to be diluted. This will reshape the outlook for the Capital A group as it is, after all, disposing of its aviation business to its indirect associate company AirAsia X Bhd (KL:AAX) for RM6.8 billion.

The disposal will result in Capital A owning 17.91% in the former — after the long-haul, low-cost airline group issued RM3 billion worth of shares at RM1.30 apiece to acquire AirAsia Aviation Group Ltd (AAAGL) — as well as placing out RM1 billion worth of shares.

At the moment, Capital A owns 12.77% of AAX shares through AirAsia Bhd.

With the earnings of its aviation business to be recognised as results from its associates, the contribution of Teleport to the group will be even more pronounced.

In FY2024, Capital A’s non-aviation business made a profit after tax (PAT) of RM162 million. Two divisions — AirAsia MOVE and ADE — are profitable for the year.

AirAsia MOVE — the super app business of Capital A which handles flight and hotel bookings, among others — made PAT of RM89 million in FY2024, down 9% y-o-y. 

Meanwhile, ADE, which is the engineering and maintenance business of Capital A, made PAT of RM72 million in FY2024, down 24% y-o-y.

It is hard to measure the earnings of the other non-aviation businesses of Capital A, as they were not reported as standalone divisions throughout FY2024.

For example, Capital A reported only the earnings of its in-flight catering arm Santan as a standalone division in the fourth quarter of FY2024, when it made a PAT of RM7,000.

Its fintech arm, Big Pay Pte Ltd, has been reported as a standalone division only in the final two quarters ended Dec 31, 2024. The company made a loss after tax of RM43.93 million in the six-month period (2HFY2024).

Meanwhile, its brand management arm Capital A International and other segments made a PAT of RM56.82 million in 2HFY2024. The segment had appeared as a standalone division since the first quarter of 2024, but only Ebitda was made available in the first half of the year.

 The huge addressable market allows Chareonwongsak to be optimistic about the future of Teleport. For FY2025, he sees the company’s volume rising almost 100%, after registering a 102% y-o-y growth.

In FY2024, Teleport handled 84.2 million parcels, compared with 41.6 million parcels in FY2023. In terms of utilised capacity, it handled 295,926 tonnes of cargo, most of which is being carried through AirAsia’s belly space.

In FY2024, however, it was the tonnage carried by its freighter fleet that grew the most, at 359% y-o-y to 38,266 tonnes, followed by those carried through its airline partners’ cargo space, which surged 309% to 22,511 tonnes.

Chareonwongsak expects Teleport’s volume to grow at an average of 50% per year over the four-year period to FY2026.

According to Chareonwongsak, as at FY2024, Teleport was already the 13th-largest air cargo company in the world. He explains that if an air cargo company carries a total volume of more than 500,000 tonnes in a year, it would be placed in the top 10; but if it carries more than a million tonnes, it would be among the top five largest companies in the industry.

“So, we believe that if we deliver two million parcels a day, we have a shot at being within the top 10 — and definitely possible within the top five — globally,” he says.

In May 2024, it was reported that Teleport was planning to obtain seven other freighter aircraft to reach its target of delivering two million parcels a day, after leasing three freighters since 2023. This no longer seems to be its plan.

Asked whether Teleport will end up replacing the aviation business of Capital A as the largest contributor to the group’s revenue, Chareonwongsak says it will not. He points out that the aviation business, which generated a revenue of about RM18.9 billion in FY2024, is just too big for Teleport to match.

In terms of value, however, he believes Teleport can become the largest among Capital A’s businesses, if it were to be listed someday.

“Because this is a unique business that not many people can do, and is built on top of the airlines. So, it’s much easier to create value when you’re building on top of something else that has been created before you,” he says. 

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