Asia Aviation—the operator of Thailand’s Thai AirAsia—will raise as much as 17.9 billion baht ($536 million) to boost the group’s finances and help revive the loss-making airline that’s been hard hit by the Covid-19 pandemic.
Through a private placement, Asia Aviation will sell 7.8 billion baht of shares to Malaysian tycoon Tony Fernandes’ AirAsia Group, the company said in a filing to the Thai bourse. A group of investors led by Pitharn Ongkosit, the CEO of KCE Electronics—founded by Pitharn’s father Bancha Ongkosit—will subscribe to an additional 1 billion baht of Asia Aviation shares, it added.
Asia Aviation—backed by Thai tycoon Tassapon Bijleveld—also plans to raise 3.9 billion baht from loans, 3 billion baht from a rights offering and 2.2 billion baht from the sale of convertible bonds.
Airlines are among the hardest hit by the pandemic as countries around the world closed their borders to contain the virus. The International Air Transport Association continues to expect airlines worldwide to incur losses of $11.6 billion next year and $51.8 billion this year. At the height of the pandemic in 2020, the industry incurred as much as $137.7 billion in losses, according to IATA.
“The situation arising from the Covid-19 pandemic has severely affected the aviation industry,” Asia Aviation said. “Although the company has recently used its best efforts to plan in order for the company’s business operation to continue during the pandemic, this has not been possible. This has resulted in a very negative impact on the company’s business and operating results.”
Airlines have been scrambling to raise fresh capital to survive the pandemic, with some seeking bankruptcy protection such as billionaire Lucio Tan’s Philippine Airlines. Asia Aviation’s partner, AirAsia said in May it plans to raise as much as 2.5 billion ringgit ($601 million) through borrowings and share sales to provide the loss-making carrier ample liquidity to weather the negative impact of the pandemic as the airline pivots into digital businesses.
Fernandes and his business partner, Kamarudin Meranun, took over AirAsia in 2001 to build a low-cost carrier that would make air travel affordable. Fernandes—who dropped out of this year’s ranking of Malaysia’s 50 Richest people—also has interests in hospitality, insurance and education.