KUALA LUMPUR (May 23): Medium-haul low-cost airline AirAsia X Bhd (AAX) said the proposed private placement to raise RM50 million would be a "timely and strategic means" for the airline to raise funds, which will primarily be used for the reactivation and maintenance of its aircraft fleet.

It noted in a statement on Tuesday (May 23) that the proposed placement would be its first equity fund raising since 2015.

"As AAX continues to evaluate its operational and financial performance as well as the viability of its Practice Note 17 regularisation plan, the proceeds from the proposed placement would serve as an interim fundraising measure to bolster its short term working capital requirements as the airline continues to recover and grow its operations in this post-Covid-19 pandemic era," it added.

Shares of AAX fell as much as 5.7% to its intraday low of RM1.81 on Tuesday after the airline said it had priced its proposed placement at RM1.55 per share.

At the close, the airline pared earlier losses to settle two sen or 1.04% lower at RM1.90, giving it a market capitalisation of RM788.15 million. The stock had closed at RM1.92 on Monday — its highest close in more than five years. Its share price is up 216.7% year to date.

On Monday, AAX announced plans to issue 32.26 million new shares, equivalent to 7.78% of its total issued shares, to AHAM Asset Management Bhd, AIIMAN Asset Management Sdn Bhd and Lavin Group Sdn Bhd at RM1.55 each — which works out to a total of RM50 million.

The issue price represented a discount of 15.96 sen or 9.34% to the five-day volume weighted average market price of AAX shares of RM1.7096 per share on May 19. The proposed exercise is expected to be completed in the third quarter of 2023.

In the statement, AAX chief executive officer Benyamin Ismail said the airline has been ramping up its operations since the reopening of the regional borders last year to cater to the demand for international air travel.

"As of May 2023, AAX has 17 aircraft within its fleet, with 11 activated and operational and we aim to activate more aircraft by the end of the year.

"So far, we have reported a turnaround of the airline’s financial performance from loss-making to registering two consecutive quarters of profit for the financial periods ended Sept 30, 2022 and Dec 31, 2022," he said.

“With this proposed placement, all indicators signal the company is moving in the right direction and will have a much stronger ground for its continued and concerted efforts to revitalise its business, as the industry’s recovery takes place in the near future,” Benyamin added.

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AirAsia X shares fall after pricing private placement at RM1.55 per share
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