The enlarged group intends to expand its fleet to more than 300 aircraft over the next five years.
PETALING JAYA: AirAsia X Bhd
’s (AAX) acquisition of Capital A Bhd’s aviation business has transformed AAX from a niche medium to long-haul operator into one of South-East Asia’s largest airline groups, with shareholdings in seven airlines across five countries and a combined fleet of 250 aircraft.
The enlarged group intends to expand its fleet to more than 300 aircraft over the next five years, while shifting capacity towards higher-density A321neo jets and establishing new hubs in Cebu, Macau and Bahrain, the latter seen as a strategic springboard into Europe and Africa.
“In the long term, Bahrain would enable AAX to expand its operations to Europe and Africa. AAX is expected to begin selling flights to Bahrain from Feb 9, 2026, we understand,” Maybank Investment Bank Research (Maybank IB) said.
Observers view the move as positive but not without longer-term uncertainties.
“It removes some financial risks associated with the previous structure of the group. Shareholders will likely feel relief, albeit temporarily, as the wider aviation landscape could be rocked by more geopolitical uncertainties,” Shukor Yusof, founder of aviation consultancy Endau Analytics, told StarBiz.
Maybank IB also highlighted that AAX remains highly sensitive to external shocks, particularly aggressive fare competition, a strong US dollar, as 60% to 80% of operating costs are dollar‑denominated, and volatile fuel prices, which account for up to half of its total operating expenses.
Despite these risks, the research house believes the acquisition marks a decisive reset for AAX, turning it into a scaled regional aviation platform with significantly stronger earnings potential than before.
Maybank IB has upgraded AAX to “buy” from “hold” and raised its 12‑month target price to RM2.45 per share from RM1.68, following the airline’s completion of a RM1bil private placement and the acquisition of five short‑haul airlines from Capital A on Jan 16.
“We like AAX as an excellent proxy to tourism, a recovering ringgit and easing jet fuel prices,” it said. At the last look, AAX’s market cap stood at RM747mil.
The brokerage has lifted its core net profit estimates for the financial years ending December 2026 and 2027 (FY26 and FY27) to about RM900mil a year, roughly seven times higher than its previous forecasts for AAX – after consolidating earnings from the newly acquired AirAsia operations in Malaysia, Thailand, Indonesia, the Philippines and Cambodia.
It assumed an average exchange rate of RM4 to the US dollar and jet fuel prices of US$85 per barrel, noting that every US$1 decline in fuel prices could add about RM75mil to annual earnings.
With short‑haul operations expected to contribute around 60% of group profits, the research house said AAX’s earnings profile would become structurally more stable than before, when performance was heavily skewed by seasonal long‑haul travel demand.
Valuation‑wise, Maybank IB is now applying a price‑to-earnings multiple of 10 times FY26 earnings, still at a discount to global low‑cost carrier peers, to reflect balance‑sheet risks.
Based on adjusted FY26 earnings per share of 25 sen, it sees upside of more than 40% from recent levels.
However, the bank cautioned that the airline group’s balance sheet remains stretched.
AAX will inherit about RM4.5bil of debt from the acquired airlines and recognise RM9.4bil in goodwill, resulting in deeply negative net tangible assets of about RM7.9bil by the end of FY26.
Net gearing, excluding lease liabilities, is projected at 155% in FY26 before easing to around 55% in FY27 as cash flows improve.
Because of restrictive debt covenants and high borrowing costs of 10% to 11%, Maybank IB does not expect the group to pay dividends for at least three years, although management plans to refinance its borrowings at lower rates to restore financial flexibility.
