MoF denies approving govt financing or guarantee to AirAsia

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KUALA LUMPUR (Oct 13): The Ministry of Finance (MoF) has denied approving any government financing or guarantee to any airline in response to a report that low-cost carrier AirAsia Group Bhd had secured credit from the government.

“The MoF would like to clarify that it has not approved any government financing or guarantee to any airline,” said an authorised MoF spokesperson.

Nikkei Asia reported today that AirAsia Group had secured RM1 billion (US$242 million) credit from the Malaysian government.

The news agency cited sources close to the MoF as saying the loan, which will be 80% guaranteed by MoF, would be made by a group of local banks under a government scheme to help companies deal with Covid-19 fallout.  

The news portal also said the fund is vital for AirAsia to utilise for repayment of short-term loans and fund working capital.

Earlier in July, the budget airline, which has been affected by the Covid 19 pandemic, said it intended to raise RM2.4 billion in order to ease its tight cash flow.

It indicated that it would source up to RM1 billion from financial institutions while raising the remaining RM1.4 billion from equity.

"The group and the company plan to raise capital of up to RM1.4 billion as and when required to strengthen its equity base and liquidity and expect the successful implementation on these capital raising plans," said the airline.

On Oct 5, AirAsia Group announced that its 33%-owned associate AirAsia Japan Co Ltd was ceasing operations due to “highly challenging operating conditions”.

It has also been reported that AirAsia Group has stopped funding its Indian affiliate as the budget carrier struggles to grow amid the pandemic.

At 2.32pm, AirAsia Group shares rose 6.72% or 4 sen to 63.5 sen, valuing it at RM2.12 billion.

Read also:
AirAsia is said to cease funding Indian venture as cash dwindles
AirAsia Japan ceases operations
AirAsia says it aims to raise RM2.4 billion via debts and equity

Surin Murugiah