AAX falls after announcing rights issue to raise up to RM395m

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KUALA LUMPUR (Feb 4): Loss-making AirAsia X Bhd has resumed trading today after announcing last Friday (Jan 30) that it plans to raise up to RM395 million through a rights issue, with the proceeds to be used for working capital and repayment of its borrowings.

However, investors appear unenthusiastic about its fund-raising plans as AAX saw its share price fall 3.5 sen or 5.34% to an intraday low of 62 sen in the morning trade after a sell-down.

At 2.45 pm today, the loss-making airline's share price settled at 62.5 sen, down 4.58% or 3 sen after over 6.4 million shares changed hands. This gives AAX (fundamental: 0; valuation: 0.3) a market capitalisation of RM1.48 billion.

MIDF Research said in a note today that the corporate exercise would be "crucial" to the long-haul budget airline's turnaround plan.

It made a "neutral" call on the stock in light of its fund raising exercise, stating that it is "cautiously optimistic on AAX's prospects" but warned that a turnaround for the airline will take time to implement.

Apart from efforts to bolster up its weak balance sheet, AAX is also going through management changes. Former chief executive officer (CEO) Azran Osman Rani left AAX on Jan 30.

Following his departure, Datuk Kamarudin Meranun was appointed group CEO while Benyamin Ismail, who was previously group head of investor relations for AAX's parent company, Air Asia Bhd, was appointed as acting CEO.