AirAsia in Talks with Government for Loan

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AirAsia Group Bhd chief executive officer Tan Sri Tony Fernandes said he is currently in discussion with the government to obtain a loan for the budget airline as a means to further support its current cash position amid a tough operating environment.

AirAsia’s net cash position stood at RM2.2 billion as of end-2019. The group recently grounded operations for a month amid the movement control order imposed from March 18 to April 14.

Fernandes said with travel restrictions imposed to curb the spread of the Covid-19 outbreak, airlines worldwide are struggling as they are hit hard with a slump in sales.

However, he remains optimistic as the company reopens for sales at the end of the month.

In an interview with Bloomberg TV earlier, Fernandes said the group has enough cash to last the company for a while and disagreed with the suggestion that it needed to be bailed out.

The Edge Markets

“We don’t need a bailout. Obviously, many airlines are looking at loans. We think the cash can last us for the most part of this year and if sales return, then we’re okay. But it’d be great to get a loan as well and we’re working on that with the government,” he said.

Fernandes also disagreed that talks of a merger and acquisition opportunity was being discussed, but did not rule out the possibility of one.

“We’re just focused on getting ourselves in order. It has not been mentioned to me at the moment. But I would keep the option open,” he told Bloomberg.

Looking ahead, Fernandes said airlines will not be focusing on growth for a while, given the uncertain economic situation; however, he remains positive that the travel sector will bounce back in due time.

On the group’s long-haul based sister company AirAsia X Bhd, Fernandes said the company is focusing on rationalising its fleet, with most flights becoming medium-haul.

“AirAsia X was doing very well pre-Covid-19 over the last fourth quarter and the beginning of January. We’re changing the fleet now and bringing down the routes to shorter distances. We think we will be a beneficiary in some ways as people want to save more money, so a low-cost product will be more viable.

“We think in the immediate future, travel will be regional and won’t be cross-continental, so we think both AirAsia and AirAsia X are in a good spot,” he said.

At the noon market close, shares in AirAsia ended one sen or 1.27% higher at 80 sen, while AirAsia X ended 0.5 sen or 10% higher at 5.5 sen. – The Edge Markets