Tony Fernandes thinks Capital A will be worth 4x more. Is he right?

A few days into the new year, Capital A CEO Tony Fernandes took to LinkedIn to inform his readers that he wanted to “prove everyone wrong.”

Image credit: Timmy Loen

The businessman claimed that by the end of the year, Capital A would be worth four times what it is.

“China is open. 150 planes back. 54 to go. Digital companies and red aviation services are very profitable,” he wrote.

When we covered Capital A last year, Fernandes was busy hyping up the group only to face a funding setback: Its 500 million ringgit (US$118 million) loan backed by state-owned financial insurer Danajamin fell apart.

Capital A, however, inched forward to close out 2022 but not without turbulence.

Flights gradually picked up, with Kuala Lumpur-based equity analysts bullish on the aviation sector, but Capital A’s aviation arm, AirAsia, has been criticized for delays and last-minute cancelations.

The group was also slapped with the Practice Note 17 (PN17) status – a label given to financially distressed listed companies by the Bursa Malaysia.

PN17 companies are given a timeframe to submit a financial regularization plan, which is basically a roadmap that spells out steps the company will take to ensure it remains a going concern.

Amid these developments, investors familiar with Capital A’s business investors speaking to Tech in Asia say they were also skeptical of the firm’s digital business, which Fernandes has been touting to be the next big thing after Grab and Gojek.

The Capital A CEO even said it could dethrone both unicorns as Southeast Asia’s e-hailing champion.

But two Malaysian investors tell us that the firm has to face fierce competition at home as well as the screeching halt of easy money it saw in 2022.

Capital A’s rivals have had a head start, and the group’s major digital business lines need cash to burn. “Which they don’t have. If not, Capital A wouldn’t be labeled PN17,” one of the investors said.

Questionable food delivery biz

One of the earliest cracks in Capital A’s digital armor came on New Year’s day when Singaporean daily The Straits Times wrote that AirAsia Food no longer operated in the city-state.

Enter: the lone bullish voice

The logistics gambit

Digital to supersede aviation