Capital A chief executive officer Tan Sri Tony Fernandes.
PETALING JAYA: Capital A Bhd
has secured a US$443mil revenue bond for AirAsia Bhd, saying that the credit is a critical step in the group’s ongoing commitment to strengthening its financial position.
The group said the private credit funds – Ares Management Corp and Indies Capital Partners – would provide US$200mil of the funding, which will be strategically utilised to reactivate aircraft that were grounded during the Covid-19 lockdowns.
“The remaining US$243mil tranche, provided by aircraft lessors, will be used to refinance existing lease liabilities, further strengthening AirAsia’s balance sheet,” it said in a statement yesterday.
A revenue bond is a type loan in which the repayments of the obligation are primarily guaranteed by an entity’s operating revenues.
Capital A chief executive (CEO) Tan Sri Tony Fernandes called the securing of the bond “a monumental development” for the group, viewing it as a reflection of confidence that investors have in the group.
“We are approaching the finish line of our post-lockdown recovery journey with the forthcoming approval of our EGM documents by Bursa Malaysia, after which we will see the emergence of two incredible companies –Capital A and AirAsia Group – both free from Practice Note 17 (PN17) status,” he said.
He said the last five years had been Capital A’s most challenging period, but is confident that rewards for its shareholders would be substantial as it begins a “new chapter”.
Fernandes emphasised that securing the bond marked a critical turning point for AirAsia, and the low-cost carrier is emerging stronger, beyond recovering from the impact of the lockdowns.
“This financing underscores the effectiveness of our strategic planning and the unwavering support of our investors, positioning us for a bright and prosperous future,” he said.
Bo Lingam, group CEO of AirAsia Aviation Group said the revenue bond is timely in strengthening AirAsia’s financial position.
Against a backdrop of growing travel demand, he said the company would utilise the funding to expand and reactivate its fleet and refinance lease liabilities for a more robust balance sheet.
“We plan to reactivate 10 aircraft in October, with an additional 15 in 2025. With ongoing customer experience initiatives and a rapidly expanding network, the future is bright for AirAsia as we accelerate in our goal of being the world’s best airline,” he said.
Filings by Capital A with Bursa Malaysia revealed that the bond had been secured through corporate guarantees from Capital A and AirAsia, as well as a first ranking charge by AirAsia over all present and future revenue proceeds it generates from passenger seat sales and ancillary revenue from selected specified routes.
On its PN17 status, Capital A was granted another extension on Monday up to Dec 31, 2024 by Bursa to submit its regularisation plan.
