Planes are full, airfares are high – and AirAsia’s never been more excited

The aviation industry is experiencing a “purple patch” with demand for seats far outstripping capacity amid a long wait for new aircraft and a shortage of pilots further discouraging any fresh competition, Tony Fernandes, the founder of low-cost carrier AirAsia, said.

“I’ve never been this bullish before,” Fernandes, who started AirAsia 23 years ago, said. “Southeast Asia is going through a renaissance period of sensible economics, and that’s a good thing.”

Following the merger, which is expected to conclude midyear, the new entity will look to raise up to US$400 million via selling equity, Fernandes said. Citigroup Inc. and US advisory bank Evercore Inc. have been appointed to lead the capital raising. A US$200 million revenue bond, securitised against revenue from new routes, is also expected to be finalised soon, he said.

Fernandes said the merger of the two airlines will create a new firm called AirAsia Group that will subsequently take over AirAsia X’s listing on Bursa Malaysia. The company may also do away with its AirAsia X branding as the aviation businesses consolidate.

AirAsia has ambitions to expand its footprint from a predominately Asian airline to a global low-cost carrier with a more extensive network. It plans to start flying to Kazakhstan, its first route in Central Asia, later this year.

Fernandes, who has previously spoken about succession at the company he founded, said on Monday that he would retain an advisory role at AirAsia Group following the merger. He’ll remain chief executive of Capital A, his other listed company that will ultimately hold all the non-aviation businesses he’s started.

Those include Teleport, a logistics company, and Move, an online travel agency that also operates a ride-hailing