CEO Fernandes unfazed by AirAsia's 'financially distressed' label

Kuala Lumpur

EVEN though Capital A - the company formerly known as AirAsia Group - has been classified by Malaysia's stock exchange as financially distressed, its chief executive Tony Fernandes maintains there is no effect on the group going forward.

Earlier this month, Bursa Malaysia Securities branded the company a "Practice Note 17", or PN17, even though Capital A has been busy raising funds to boost its balance sheet.

Firms with this label face being delisted if they cannot regularise their finances within a certain timeframe.

This status recently gained attention when Serba Dinamik Holdings, a Malaysian oil and gas company that had gone through an auditing fiasco, was tagged with the status.

"If you look at the classification, it is purely accounting and in fact, the solution has nothing to do with liquidity," said Fernandes at a press conference on Friday (Jan 28) to announce the rebranding, in order to reflect its growing portfolio of businesses beyond the core budget airline.

The airline business will, however, continue to be known as AirAsia, a brand that is well known in Asia, he added.

"The definition of what constitutes PN17 is not really clear to the layman, which is why I have spoken to Bursa to relook into the rules and clarify the definition," he added.

He shared how the group has already raised RM2.5 billion (S$809.5 million), with plans to raise another RM1 billion of capital soon.

He explained that PN17 was imposed because of the failure to pay the leasing costs that appeared on the company's profit-and-loss statement.

The current focus for Capital A will still be on raising capital while the plans for an initial public offering will take a backseat for now, said Fernandes.

He cited the recently secured US$100 million from South Korea's SK Group for Capital A's fintech company, as well as other ventures coming close to securing investments ranging from US$30 million to US$200 million.

"The group has more than enough liquidity. We are very focused on growing and adding value," he said.

When asked by The Business Times about Capital A's focus and strategy for 2022, Fernandes maintained that its priorities are to be affordable, accessible and inclusive. "We are good at building community, being inclusive, making things accessible and making things easy. The focus is also about growing the business where we can provide a cost advantage to the masses and produce a product that gives everyone a chance," he said.

"Looking at all our companies, they can all benefit from one another. For example, customers of (logistics arm) Teleport can borrow money from (payments business)) Bigpay, while the Superapp uses Teleport services or our Xpress business. Everything is interlinked."

Separately, Capital A also announced a 5-year plan for growth in South-east Asia. Among its many plans are to have its airline connect over 1 billion people in the region, achieve 10 million monthly active users for BigPay, and for its engineering division to be an "industry leader" for maintenance, repair and overhaul services.

"Over the past 2 years, we have spent the downturn in flying to build a solid foundation for a viable and successful future, which is not solely reliant on airfares alone," said Fernandes in a statement.