AirAsia X (D7, Kuala Lumpur International) has submitted a listing application and draft circular to Malaysia's stock exchange (Bursa Malaysia) detailing its planned acquisition of Capital A's equity interests in AirAsia Berhad, operator of AirAsia, and AirAsia Aviation Group Limited, which operates AirAsia Cambodia, Indonesia AirAsia, AirAsia Philippines, and Thai AirAsia.

Under the proposed terms, AirAsia X shareholders will be able to access Capital A's aviation businesses, valued at MYR6.8 billion ringgits (USD1.51 billion), through a MYR3 billion (USD665 million) issuance of new shares.

"This strategic move is set to strengthen our market position and streamline AirAsia operations across the region," AirAsia X Chairman Fam Lee Ee declared. "Our shareholders stand to benefit significantly from this acquisition. The enlarged entity is expected to deliver improved financial performance, with increased revenue streams and cost savings from integrated operations."

The deal will see AirAsia X Bhd, the listed entity trading as AirAsia X, take a 100% equity interest in AirAsia Aviation Group Ltd through the share issue. It will also take a 100% stake in AirAsia Bhd for MYR3.8 billion (USD843 million) through the assumption of debt AirAsia owes to Capital A. Until recently, AirAsia X planned to use a newly formed entity called AirAsia Group Sdn Bhd to close the deal, but under a recent internal reorganisation it abandoned that plan and will acquire the aviation businesses directly.

In a separate Bursa Malaysia filing, Capital A says that as a result of the transaction, Capital A's shareholders fund will turn positive from negative MYR8.8 billion (USD1.95 billion), transforming its financial position and taking it closer to exiting its PN17 status, a setting Bursa Malaysia applies to listed entities it considers to be in financial distress.

“It took four years of painstaking efforts to get us here," said Capital A CEO Tony Fernandes. "This will ensure [AirAsia X shareholders'] continued participation [in] and benefit from the aviation businesses' potential prospects while providing greater investment clarity between Capital A and AirAsia X, allowing the capital market and investors to better see the potential and prospects of each entity.”

After securing approval from Bursa Malaysia and sending the required circular to shareholders, AirAsia X will convene an extraordinary general meeting within 21 days. Under the current timeline, AirAsia X hopes to close the deal by the end of this year.