KUALA LUMPUR (Sept 24): AirAsia Group Bhd is looking at options to raise capital for its rebranded digital business arm — AirAsia Digital — according to group chief executive officer (CEO) Tan Sri Tony Fernandes.

“It could be convertible debt or equity. We just started the process; we don't need a lot,” said Tony Fernandes at AirAsia Digital's media briefing here today.

However, he did not disclose how much the company wants to raise.

“We built all of this on our very own capital so far, just like how we built AirAsia. We will see ... we have some debt capital coming in that has been secured for some parts of the group, [namely] Teleport and Santan, which will be announced soon,” he said.

Teleport is AirAsia’s cross-border logistics arm, while Santan is its food and beverage (F&B) unit that serves AirAsia’s popular in-flight meals, with several franchise outlets in development.

AirAsia Digital, previously known as RedBeat Ventures, is to help diversify the group’s revenue, said Fernandes, and it is an initiative that started two years before the Covid-19 pandemic outbreak.

As for the group's core airline business, he said: “We think AirAsia will definitely come back; we just have to wait [for] the borders to be opened. We hope that will be imminent."

He also said the airline is planning to launch new routes for the interior areas of Kuching and Langkawi, as well as one domestic route in Thailand.

On whether the digital business could compensate the shortfall in the group’s earnings, AirAsia Group executive chairman Datuk Kamarudin Meranun said: “I don’t think anything can compensate for the shortfall because we are starting fresh with this digital business.”

“Hopefully, it could somewhat cushion the impact. By the time [the] market is open, aviation will go back to its normal days. And the digital business will have expanded and be another core business [for us]. It can be as big as our aviation business,” he added.

In the meantime, Kamarudin said the digital business should be able to "cushion [the shortfall in earnings] enough for us to survive”, without disclosing any earnings targets.

According to AirAsia, AirAsia Digital integrates the group’s continued innovation focus and business-building expertise, best-in-breed technology solutions, talent development programmes and big data insights for travel and lifestyle businesses to thrive in Asean.

The digital business comprises three main pillars: Venture Builder, RedBeat Academy and Data Centre.

Under Venture Builder, AirAsia Digital will incubate and grow strategic businesses, some of which are spin-offs from AirAsia’s business units. The three focus areas are platform, logistics and e-commerce, as well as financial services.

As for RedBeat Academy, it is a collaboration between AirAsia Group's corporate venture arm — RedBeat Ventures — with Google, which aims to be a one-stop tech, leadership and innovation training academy. Data Centre, on the other hand, is a data consultancy department that provides a range of data analytics services, including data engineering and data governance.

At the time of writing today, shares in AirAsia were down one sen at 64 sen, bringing it a market capitalisation of RM2.17 billion. It saw some 5.86 million shares traded.