In a strategic move to strengthen ties with the Southeast Asian region, Saudi Arabia's sovereign wealth fund, the Public Investment Fund, is set to inject approximately $100 million into Malaysian carrier group AirAsia. Sources familiar with the matter revealed that this investment would play a significant role in AirAsia's fundraising efforts, with a targeted goal of around 1 billion ringgit ($226 million).
The fundraising initiative comes at a crucial time for AirAsia, as the airline seeks to revitalize its growth plans following a period of losses induced by the Covid-19 pandemic. Alongside the Public Investment Fund, discussions are also underway with potential investors from Singapore and Japan, further underscoring the airline's appeal on the investment front.
A deal announcement may be on the horizon in the coming weeks, although uncertainties loom, and the agreement could still face hurdles. AirAsia's attractiveness stems from its extensive backlog of over 350 narrowbody aircraft orders with Airbus SE, valued at $2 billion. Notably, Saudi's Riyadh Air, a startup airline under the fund's umbrella, recently secured a portion of AirAsia's aircraft delivery slots, aiding in the latter's restructuring efforts and alleviating immediate financial pressures.
The move to invest in AirAsia aligns with the Public Investment Fund's broader strategy of diversifying its portfolio and expanding its footprint in the aviation sector. With Crown Prince Mohammed Bin Salman spearheading initiatives to transform Saudi Arabia into a global travel hub, investments in airlines and aviation-related assets demonstrate the kingdom's commitment to economic diversification beyond oil revenues.
AirAsia's parent company, Capital A, has faced financial challenges amidst the pandemic, with failed attempts at listing its brand unit in the U.S. last year. The ongoing restructuring and potential infusion of funds from the Public Investment Fund signal a potential turning point for the airline group, positioning it for future growth and a potential aircraft order for regional jets in the near future.