Saudi Arabia’s Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, may be interested in taking an equity stake in Malaysia-based low-cost carrier AirAsia, Bloomberg reports.
According to these reports, which have not been officially confirmed although appear to be based on comments from people familiar with the matter, the Saudi fund would invest close to US$100 million to get a 15% stake in Capital A, the parent company of the AirAsia group of airlines.
This amount would be part of a larger $226 million round and would value the Malaysian entity at US$2 billion. Investors from Singapore and Japan are also said to be taking part in conversations to join this round.
These rumors emerged shortly after Tony Fernandes, Capital A’s iconic CEO, announced that, following the approval by Bursa Malaysia (the Malaysian stock exchange) of the company’s restructuring plan, the group was close to exiting PN17 status.
PN17 is a designation Bursa Malaysia (the Malaysian stock exchange) uses for companies experiencing some degree of financial distress.
Capital A received its PN17 designation in 2022, as the group’s airlines were still reeling from the heavy impact of the COVID pandemic and the comprehensive travel restrictions enforced by several countries across Asia.
AirAsia’s family of airlines have been able to continue operating under PN17, this status made it difficult for the firm to raise fresh capital.
In early 2024, Capital A announced a reorganization of its varied businesses, which would see its portfolio of short haul airlines, all of which operate under the AirAsia brand, will be folded into AirAsia X, the group’s long-haul airline business.
Although few details are known about the potential structure of the funding deal, it would be logical to expect that any new investors would enter the capital of this merged airline holding company.
While it awaits the merger with Capital A’s other airlines, AirAsia X, which is listed as a stand-alone entity on the Kuala Lumpur stock exchange, posted its third consecutive full year profit. In the fiscal year 2024, Air Asia’s long-haul business increased its passenger numbers by 42%, to nearly 4 million, and its revenue by 28%, to RM3.2 billion (US$ 750 million approximately). However, in 2024, net profit declined to RM229.1 million from RM336.5 million the preceding year. The company attributed this drop to an unexpected reversal of provisions in 2023, which had brought up that year’s net profit. The implication being that the 2024 figure, thus, would be a better reflection of the regular operational results.
If finally confirmed, the AirAsia stake would add to a portfolio of high-profile aviation assets that Saudi Arabia’s PIF has been building throughout the world in the course of the last few years.
The Saudi fund is a shareholder in the Saudia Group, which has been, to this date Saudi Arabia’s main airline group. PIF is also funding the launch of Riyadh Air, the kingdom’s new and second flag carrier, it has established AviLease, an aircraft leasing firm with global ambitions, and, in December 2024, it completed the acquisition of a 15% stake in the company managing London Heathrow Airport (LHR).
This interest in commercial aviation investment opportunities is in line with Saudi Arabia’s Vision 2030, which has the transformation of the kingdom into a major player in the global aerospace and aviation industries, as one of its goals.
Air Asia has reportedly declined to comment on the rumors concerning a new investment round.
