NEW DELHI: AirAsia is considering raising more than 1 billion ringgit ($234 million) in an effort to pull itself out of the current financial crisis, according to AirAsia Group Berhad CEO Tony Fernandes. In a statement on Thursday, Fernandes said that the airline has received indications from certain financial institutions that they may support AirAsia’s request for funding.
“Of this debt funding, a certain portion would be eligible for the government guarantee loan under the Danajamin PRIHATIN Guarantee Scheme in Malaysia. Other than Malaysia, our Philippine and Indonesia entities are currently in various stages of bank loan applications.
In the Philippines, we have applied for the government guaranteed loan under the Philippine Economic Stimulus Act (PESA), with an expected positive outcome,” said Fernandes. Separately, in an interview with Nikkei Asian Review, Fernandes said that Air Asia can bounce back to profitability next year, but that it will look to raise 2 billion ringgit ($469 million) over the next six months to ensure it was in a comfortable position.
That the airline is looking for additional funding comes just a day after its external auditor Ernst & Young issued an unqualified audit opinion where it cast significant doubt on the ability of the airline to continue as a going concern. The airline has recorded a Q1 loss of nearly $200 million, its biggest quarterly loss since its 2004 listing.
In India, Air Asia runs a JV airline with Tata Group and holds an estimated 6-7 per cent market share. While reports have been doing the rounds that the Tatas may buy out AirAsia’s 49 per cent stake, no official word has come. A large number of budget carriers across the world have already announced bankruptcy while the big ones are taking all possible measures to cut their spending. AirAsia has also said it will be rationalising its headcount and implementing group-wide temporary salary reduction of 15-75 per cent.