Tony Fernandes’s Capital A group is planning New York listings for its low-cost AirAsia airline and a digital “super app”.
“If you want to be an actor, you’re probably going to want to end up in Hollywood at some stage in your career,” Fernandes told the Financial Times. “We think the time is right for part of Capital A group to be listed in the United States.”
He said the group, which changed its name earlier this year, had begun compliance work and envisaged two separate listings, one for AirAsia “sometime next year”, followed by the so-called super app, which will offer services from travel to takeaways.
The company, which previously considered merging its digital businesses with a special purpose acquisition company, crashed into the red during the pandemic, prompting EY in July 2020 to question its ability to survive.
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Fernandes, who pivoted to ecommerce and digital businesses during the pandemic, said that issue had now been resolved.
While Capital A’s shares remain under Practice Note 17 on the Malaysian stock exchange — a listing for groups in financial distress — Fernandes insisted that was a solvable “accounting” issue, which “doesn’t reflect the fundamentals of the company”.
The airline’s first-quarter losses widened 90 per cent compared with the same period in 2021, while the group’s Malaysia-listed shares remain at a sixth of their 2018 peak.
Fernandes, Capital A’s chief executive, said 85 of AirAsia’s 212 aircraft were now flying, with 80 to 90 per cent load factors, and 176 aircraft will be back in the skies by December.
“I think in the third and fourth quarter, we would be Ebitda-positive, including leasing, and so ... I’m quite confident of 2023 being profitable and definitely cash flow positive,” he said.
South Korean conglomerate SK last year invested $100 million (€950 million) in the group’s BigPay fintech business.
Commenting on the listing plans, Fernandes said his success in transforming from Warner Music executive to budget aviation pioneer after buying AirAsia from the Malaysian government in 2001 for less than $1, would eventually sway investors.
“Twenty years ago, when I started this airline, no investor wanted to invest in us. It wasn’t a very convincing story to say you’re going to start up an airline when you’re from the music business, with no money, and go up against Malaysia Airlines, Singapore Airlines and the like,” he said.
“Twenty years later, I now say I’m going to take on these digital unicorns. Probably not a convincing story either from an airline that’s struggling, going through Covid, has a weak balance sheet, etc. But it’s slowly coming.”
Fernandes also said he saw the 100 superfast, drone-like electric vertical take-off and landing (eVTOL) air taxis, which the group is leasing from Dublin-based Avolon, enhancing the positive trend. Avolon hopes eVTOLs will gain regulatory clearance by 2025.
Fernandes shrugged off the notion he was overstretching himself, while Dómhnal Slattery, chief executive of Avolon, quoted aviation pioneer Wilbur Wright: “Eagles don’t soar in the calm,” he said. “They need the wind against them.” — Copyright The Financial Times Limited 2022
