On March 3, 2025, Capital A Bhd, the parent company of the AirAsia aviation group, saw its stock plummet to a five-month low following the release of disappointing financial results for 2024. The company, listed on the Bursa Malaysia under the ticker KL: CAPITALA, reported an unexpected net loss of RM475.11 million for the full year, a figure that caught analysts off guard and triggered a sharp sell-off. By midday on Monday, shares of Capital A had dropped as much as 11%, hitting a low of 82.5 sen, before recovering slightly to close at 83.5 sen, still down 3.5% or three sen from the previous day’s close. This decline marked the stock’s weakest performance since October 2024, reflecting investor unease about the company’s financial health and its ongoing struggles under Practice Note 17 (PN17) status, a designation for financially distressed firms in Malaysia.
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The ripple effect of Capital A’s dismal results extended to its medium-haul affiliate, AirAsia X (KL: AAX), which also experienced a significant downturn. AirAsia X’s stock fell nearly 7% during the trading session, reaching a low of RM1.61, a level last seen in September 2024. By the close of the market, shares settled at RM1.61, down 12 sen or 6.9%. The simultaneous drop in both stocks underscores the interconnected challenges facing the AirAsia ecosystem, which has been grappling with a complex mix of operational and financial hurdles. While Capital A’s loss was a major driver of the market reaction, AirAsia X managed to outperform expectations for the year, though this was not enough to shield it from the broader negative sentiment.
The financial strain on Capital A stems from multiple factors, including foreign exchange losses and rising operational costs, despite efforts to ramp up its aviation operations. The company has been working to reactivate its fleet, with 17 of AirAsia X’s 19 aircraft operational as of the latest updates, and plans to have all aircraft flying by June 2025. However, the costs associated with bringing planes back into service, compounded by supply chain disruptions and maintenance challenges, have weighed heavily on the bottom line. Analysts had anticipated a turnaround in 2025, buoyed by expectations of increased capacity and moderating maintenance expenses, but the 2024 loss has cast doubt on the pace of recovery. Maybank Investment Bank noted some optimism, suggesting that 2025 could be profitable if active aircraft numbers rise and costs stabilize, yet the market’s immediate response suggests a lack of confidence in the near term.
Capital A’s PN17 status, in place since January 2022, remains a critical concern. The company has repeatedly delayed its exit from this classification, with the latest target set for June 2025 pending regulatory approvals. This prolonged financial distress has eroded investor trust, as evidenced by the stock’s 18% decline year-to-date. Meanwhile, AirAsia X, though performing better operationally, is tied to the broader group’s fortunes, particularly as discussions of a potential merger with Capital A’s aviation assets continue to circulate. The market consensus for Capital A reflects caution, with five "hold" and two "sell" ratings outweighing five "buy" recommendations, and an average target price of RM1.13, well above the current trading level. Despite the gloomy financial picture, Capital A outlined ambitious internal targets for 2025, aiming for its aviation segment to achieve earnings before interest, taxes, depreciation, and amortization (EBITDA) of RM4.8 billion, while its non-aviation businesses, including logistics and digital ventures, are projected to contribute RM600 million. These goals hinge on a recovery in travel demand and operational efficiency, areas where the company has historically excelled but which have been tested by global aviation challenges. For now, the sharp drop in both Capital A and AirAsia X stocks highlights the fragility of their recovery narrative, leaving investors to weigh the promise of future growth against the reality of persistent losses.