AirAsia seeks up to $822m injection to survive Covid-19 fallout

An AirAsia employee manning an empty sales counter at U-Tapao Airport in Rayong, Thailand, in February. The Malaysian budget carrier, which last month posted its largest quarterly loss on record, resumed domestic operations in late April, but its lon
An AirAsia employee manning an empty sales counter at U-Tapao Airport in Rayong, Thailand, in February. The Malaysian budget carrier, which last month posted its largest quarterly loss on record, resumed domestic operations in late April, but its long-haul unit, AirAsia X, is still not flying. PHOTO: AGENCE FRANCE-PRESSE

KUALA LUMPUR • AirAsia Group is seeking to raise as much as RM2.5 billion (S$822 million) by the end of the year as it tries to survive a business slump exacerbated by the coronavirus pandemic.

The Malaysian budget carrier may borrow up to RM1.5 billion from banks and another RM1 billion from investors, a spokesman said yesterday.

AirAsia is also in talks with local and foreign investors, including private equity firms, strategic partners and conglomerates, she said, confirming an earlier report by Reuters that cited group chief executive Tony Fernandes.

Airlines around the world are losing money after grounding thousands of planes as countries shut borders and restrict the movement of people.

AirAsia, which last month posted its largest quarterly loss on record, resumed domestic operations in late April, but its long-haul unit, AirAsia X, is still not flying.

Auditor Ernst & Young said in July their ability to continue as going concerns may be in "significant doubt".

South Korea's SK Group said in June that it was in talks to buy a small stake in AirAsia, without providing further details.

The airline has also cut the salaries of management, trimmed jobs and deferred plane deliveries in an attempt to shave costs by 30 per cent this year.

AirAsia is also evaluating its operations in Japan and will make a decision very soon, the spokesman said.

Its India venture remains as is, she added without elaborating.

The airline is looking to consolidate and strengthen its business in South-east Asia, even if that means exiting Japan and India, Reuters reported earlier.

AirAsia's India venture remains as is, a spokesman said without elaborating. The airline is looking to consolidate and strengthen its business in South-east Asia, even if that means exiting Japan and India, Reuters reported earlier.

AirAsia X said last month that it needs to reach agreements with major creditors to restructure outstanding debt because it faces "severe liquidity constraints" that threaten its ability to resume flying and continue as a going concern.

The long-haul budget unit and its subsidiary AAX Leasing Two have received a claim from lessor BOC Aviation regarding US$23 million (S$31.5 million) of outstanding amounts due under lease agreements, according to an exchange filing last Friday.

AirAsia X, which said it is seeking legal advice, leases four aircraft from BOC.

AirAsia is one of Airbus' major customers for A-320s while AirAsia X is the world's biggest customer of Airbus A-330neo planes.

AirAsia X has 78 of the aircraft on order, according to Airbus' website, and has already deferred delivery of some A-330neos.

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A version of this article appeared in the print edition of The Straits Times on September 09, 2020, with the headline 'AirAsia seeks up to $822m injection to survive Covid-19 fallout'. Subscribe