Malaysian Tycoon Tony Fernandes’ AirAsia To Raise Up To $238 Million To Fund Recovery, Digital Pivot

Tony Fernandes, AirAsia Group’s CEO, announced late Monday that the group would raise 1 billion ringgit ($238.6m) through a convertible bond issue to existing shareholders. The move comes as the budget carrier prepares for the return of flights and develops its digital platform.

The company proposed to raise funds by offering 7-year convertible unsecured Islamic bonds securities (RCUIDS) to existing shareholders. Each nominal value is 0.75 ringgit. Two RCUIDS are required for each six AirAsia shares. All debt instruments are free to be attached to warrants.

Fernandes, the 57-year-old CEO of AirAsia, stated that fundraising was an essential part of the recovery strategy.

The new funds will give the airline sufficient liquidity to deal with the long-term effects of the Covid-19 virus pandemic. It has placed many countries such as Australia under lockdown while governments try to curtail the spread of this deadly disease. AirAsia is in trouble for seven consecutive quarters and posted a net loss of 767.4million ringgit in its first quarter.

Fernandes remains optimistic that global aviation will return to normal from the fourth quarter through the first of 2022, despite the loss.

Fernandes noted that vaccines are being aggressively introduced in critical markets and said, “There is light at the end of the long tunnel.”

AirAsia announced in May that it would raise to 2.5 billion Ringgit through share sales and debt. AirAsia generated 336m ringgit through share placements in the first quarter of this year.

According to the company, funds from the rights sale of RCUIDs (expected to be complete by the fourth quarter) will be used for fuel hedges, aircraft leasing and fund the group’s digital initiatives.

Fernandes explained that, while the airline will remain the backbone of all operations in the future, over the past 18-months, our digital transformation strategy gained substantial momentum with significant improvement across all key metrics to our Airasia super app and logistics venture Teleport as well as our for BigPay fintech enterprise.

BigPay is looking for one of five Malaysian digital banking licenses. This license will allow BigPay to expand beyond international remittance.

Last week, Gojek’s operations were taken over by the airline in a stock exchange. The deal will give Gojek a 4.76% stake at AirAsia Digital.

Fernandes explained that the deal which values AirAsia Digital @ $1 billion would “turbocharge” the airline’s ambition to be one the top super apps in Southeast Asia.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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