UPDATE 1-Malaysia's Capital A looks to raise $400 mln equity from aviation business merger, group chief says

(Releads, adds details from paragraph 2 onwards) By Rozanna Latiff and Danial Azhar KUALA LUMPUR, Feb 26 (Reuters) - Malaysia's Capital A Berhad CAPI.KL , parent of budget airline AirAsia, is looking to raise up to $400 million in equity from a planned merger of its aviation business, which it hopes to complete by July, its top official said on Monday. Group Chief Executive Tony Fernandes in an interview said that would be on top of a $200 million bond-raising the company is hoping to conduct in the next few weeks, as it awaits regulator and shareholder approval to complete the sale of its aviation business to long-haul unit AirAsia X Bhd AIRX.KL . The combined entity would see the formation of a new airline AirAsia Group, he said. "(We hope) the acquisition by AirAsia X of Capital A aviation assets will be done by June and July," Fernandes told Reuters. Capital A last month said it plans to consolidate both its long and short-haul operations under a single AirAsia brand. The proposed deal involves the sale of AirAsia Berhad and AirAsia Aviation Group Ltd - which includes AirAsia units in Thailand, Indonesia, Philippines, and Cambodia - to its long-haul arm AirAsia X. (Reporting by Danial Azhar and Rozanna Latiff; Editing by Martin Petty) (([email protected] ; Twitter: https://twitter.com/dan_azh ;;))