Capital A divests airline business to AirAsia Group in landmark deal

Capital A Berhad (Capital A) and the newly formed AirAsia Group Sdn Bhd have signed a conditional sale and purchase agreement for Capital A to divest its aviation businesses to AirAsia Group. The deal is valued at RM6.8 billion ($1.4 billion).

Under the agreement terms, Capital A will divest AirAsia Aviation Group Limited (AAAGL), comprising AirAsia subsidiaries in Thailand, Indonesia, the Philippines, and Cambodia. This will be fulfilled through AirAsia Group issuing new shares worth RM3 billion to Capital A. Capital A will then distribute RM2.2 billion of these new shares to its shareholders.

Additionally, Capital A will divest AirAsia Berhad (AirAsia Malaysia) for RM3.8 billion by having AirAsia Group assume RM3.8 billion of debt owed by Capital A to AirAsia Berhad.

“Today’s announcement is more than just a transaction, but a unique and time-sensitive opportunity to elevate our aviation business to the next level, while driving growth and profitability across core non-airline business portfolios for Capital A,” said Capital A CEO Tony Fernandes, who will also advise the newly formed aviation group.

The deal will see AirAsia X’s shares and listing transferred to AirAsia Group, creating an enlarged aviation entity. AirAsia X shareholders will receive shares in the new group, along with free warrants.

AirAsia Aviation Group CEO Bo Lingam stated the unification allows leveraging Airbus’ new long-range A321 models to “explore new destinations and pioneering new and underserved routes.”

Capital A shareholders will gain by unlocking an estimated RM6.8 billion in value from the aviation business divestment. After the deal, Capital A will retain businesses like aviation services, logistics, and digital ventures.

The transaction awaits regulatory approvals but promises a strategic realignment as Capital A pivots away from airlines while AirAsia Group consolidates its position as ASEAN’s largest low-cost carrier.

Dirk Andrei Salcedo Avatar

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