In a significant move for the Malaysian aviation industry, shareholders have approved the acquisition of budget carrier AirAsia by its long-haul associate, AirAsia X. This $1.6 billion deal, involving the purchase of Capital A's equity interest in AirAsia units, is set to be finalized by the end of the year, pending final court and regulatory approvals. The merger aims to streamline operations and expand the global network reach of the combined airlines.

AirAsia, known for its short-haul routes across Asia, will merge with AirAsia X, which operates long-haul flights to destinations such as Australia and Saudi Arabia. This consolidation is expected to create operational efficiencies and enhance route offerings, providing a broader range of travel options for passengers.

Both AirAsia X and Capital A have faced financial challenges due to pandemic-related travel restrictions, leading to their classification as financially distressed under Malaysia's PN17 status. However, AirAsia X has already exited this status, and Capital A aims to follow suit with this strategic divestment.

The merger will also result in a 15% cost reduction, according to Capital A CEO Tony Fernandes, who highlighted the potential for lower ticket prices and increased flight frequencies. The expanded AirAsia Group plans to increase its fleet and add new destinations, enhancing its competitive position in key markets.

This acquisition is part of AirAsia X's long-term strategy to strengthen its presence in the global aviation industry, with plans to expand into new markets in Asia, Africa, and beyond. The deal has received overwhelming support from shareholders, marking a pivotal moment for the future of low-cost travel in the region.