AirAsia’s Nasdaq Makes a Debut as Tony Fernandes Eyes Brand Expansion in SPAC Merger

AirAsia is poised to debut its brand management unit on the Nasdaq following the finalization of a SPAC merger, banking on the allure of franchise and licensing opportunities for an American audience less familiar with the budget airline.

Tony Fernandes, the founder and CEO of Malaysia-based Capital A Bhd., which encompasses the short-haul airline and related units including the brand business, conveyed to CNBC this week the intention to raise awareness about the potential within Southeast Asia’s nearly 700 million-strong population and beyond.

“We picked America because Americans understand branding better than the markets in Southeast Asia,” Fernandes noted, acknowledging the relative obscurity of the AirAsia brand in the U.S.

“It’s my job to get investors excited about the growth potential of our brand … and also being in a very exciting part of the world, with geopolitics, ASEAN has received much more attention.”

Tony Fernandes targets awareness of Southeast Asia
Tony Fernandes targets awareness of Southeast Asia’s potential through the SPAC merger.

Fernandes outlined potential brand licensing opportunities in various sectors such as hotels, mobile services, and airlines in markets like South Asia and Africa where AirAsia lacks subsidiaries. According to a release on Wednesday, the deal values the new entity, Capital A International, at $1.15 billion. The company will also explore acquisitions and licensing for its 14 other brands.

In 2001, Fernandes acquired the struggling carrier AirAsia from the Malaysian government for 1 Malaysian ringgit (approximately 20 cents) and 40 million ringgit in debt. Since then, the low-cost airline has expanded to a fleet of over 240 aircraft. Fernandes is currently focused on reviving Capital A from its financially distressed state during the pandemic and securing capital injections for further expansion.

Part of this strategy involves divesting AirAsia’s core short-haul aviation business, comprising several regional subsidiaries, from Capital A to its Malaysia-listed sister firm Air Asia X, its mid- to long-haul business. This move aims to create a unified Air Asia Group, with a target of a $400 million equity raise, according to Reuters.

Pending regulatory approval, the agreement reached on Wednesday with Aetherium Acquisition Corp.— a SPAC— will result in Capital A International becoming publicly traded on the Nasdaq.

SPACs experienced a surge in popularity in 2020 and 2021 during the peak of the Covid-19 pandemic-induced market frenzy. However, the momentum slowed significantly in 2022 due to several companies failing to meet high expectations, coupled with rising market volatility and interest rates.

Capital A International values at $1.15 billion,
Capital A International values at $1.15 billion, eyes acquisitions, and brand licensing opportunities. 

“Why a SPAC? I see it really as a reverse listing in America,” Fernandes explained. “SPACs have got a bad name because a lot of these were, I’m going to be frank, hair-brained business schemes, sending people to the moon. … We’re generating real cash flow, real profits,” he added.

In a similar vein, AirAsia’s trajectory will resemble that of Singapore-based, Southeast Asia-focused Grab, a “super app” service, which went public on the Nasdaq in December 2021 following a SPAC merger.

Despite facing challenges, including a significant drop in share value on its first trading day, the SoftBank-backed company has persisted.

“Like it or lump it, Grab has set the way by showing that a Southeast Asian company can list in America,” Fernandes remarked. “It’s not going to be a walk in the park, we’ll have to work [for] it, but while we might not be as well known in America, the concept of what we’re doing is better understood in that part of the world.”

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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