The deal, which is expected to be completed in the fourth quarter of 2017, implies RMPP will become the new holding company of Indonesia AirAsia.

Currently, AirAsia Bhd controls a 49 percent stake in Indonesia AirAsia as foreign ownership in Indonesian airlines is capped at a maximum of 49 percent. The remaining shares in Indonesia AirAsia are controlled by Fersindo Nusaperkasa. The debt-and-share-swap deal implies Fersindo Nusaperkasa also obtains a stake in RMPP. After completion of the deal AirAsia and Fersindo Nusaperkasa will own up to 48 percent and 49.96 percent, respectively, in RMPP.

Several weeks ago Tony Fernandes, Chief Executive of the AirAsia Group, still confirmed the Malaysian group's plans to conduct an initial public offering (IPO) for its Indonesia AirAsia unit on the Indonesia Stock Exchange before the end of 2017. Therefore, the news about the back-door listing was a surprise.

Previously, Indonesia AirAsia had already expressed its desire for an IPO in 2016 as it seeks fresh funds for further business expansion (specifically for the purchase of new airplanes and opening of new flight routes). However, domestic and global uncertainty made the airline decide to postpone the corporate move.

In the first half of 2017, Indonesia AirAsia's net loss was recorded at IDR 557.88 billion (approx. USD $43.4 million), weakening significantly compared to the same period in 2016 when its net loss was IDR 34.7 billion. Over the past two years the budget carrier has recorded losses.

Meanwhile, Indonesia AirAsia's H1-2017 revenue reached IDR 1.9 trillion, a 6.1 percent (y/y) increase from IDR 1.81 trillion in the same period one year earlier.