Capital A, the entity behind the AirAsia Aviation Group of airlines, remains committed to a November 2023 launch of AirAsia Cambodia (Phnom Penh). It comes as Capital A steps up its involvement in the Cambodian market and takes a 60% stake in a local ground services company called ADE Cambodia.
In late 2022, ch-aviation reported that Capital A had set up a joint venture company, AirAsia (Cambodia) Co., Ltd, to facilitate its entry into Cambodia with the AirAsia brand. The start-up is a 51/49 joint venture with the hospitality group Sivilai Asia.
This week, Capital A announced another joint venture agreement with Sivilai Asia. A September 20 Bursa Malaysia filing said the principal activities of ADE Cambodia will be engineering maintenance services, component and warehouse services, engineering support services, and digital and innovation services to aircraft, including repair and maintenance of aircraft and/or engines, consultancy, and training. Capital A says ADE Cambodia will support its local low-cost carrier.
“This will create an opportunity for ADE to establish its operation in Cambodia,” the filing reads, noting that ADE will also hunt for business from other airlines flying into the country. “The objective is to optimize utilization of ADE’s assets at maximum capacity to reach utmost productivity […] enabling Capital A to capitalize on cost-saving opportunities and potentially capture surpluses from new revenue streams generated.”
Capital A is making the USD1.2 million investment via its subsidiary, Asia Digital Engineering Sdn Bhd, a Malaysia-based business principally engaged in aircraft maintenance, repair, and overhaul. Sivilai Asia is a Cambodia-based incorporated in early 2022. Its core business is providing consulting services to the hospitality industry.
The Capital A investment, which is funded from internal cash reserves and not subject to approval from Capital A shareholders, is expected to be finalized by the end of 2023.