AirAsia secures loan; capital raising progressing: CEO

Published Thu, Oct 22, 2020 · 09:50 PM

Kuala Lumpur

MALAYSIA'S budget carrier AirAsia Group has secured a loan as part of its ongoing capital raising plans, an executive said on Thursday.

Riad Asmat, chief executive officer of the group's Malaysian unit, AirAsia Bhd, said "a loan has been approved and disbursed", in response to a Reuters query about a report from New Straits Times that said the airline had secured a RM300 million (S$98 million) loan to keep it afloat amid the coronavirus pandemic.

The report, citing sources, said the airline took the loan from Sabah Development Bank Bhd and that it would tide the airline over for two months, financing local operations.

"We would not be able to disclose the specifics including the lender(s) and amount involved.

"This loan is part of the capital raising exercise by AirAsia Group, which is moving in the right direction and we are pleased with the progress," Mr Riad said.


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Sabah Development Bank could not immediately be reached for comment.

AirAsia has said it is looking to raise as much as RM2.5 billion by year-end, RM1.5 billion of which could be in bank loans.

The group has also been seeking a portion of its loans to be guaranteed by the government.

Two weeks ago, its long haul arm AirAsia X Bhd proposed a US$15.3 billion debt restructuring and cutting share capital to avoid liquidation.

Meanwhile, Malaysia Aviation Group (MAG), parent of national carrier Malaysia Airlines (MAB), has offered employees early retirement as the company continues negotiations with creditors and lessors, state news agency Bernama reported on Thursday.

Bernama said it had seen an application form for the scheme, aimed at employees across the airline group, including MAB and sister airline among other operations.

MAG did not respond immediately to a request for comment.

The group has warned leasing companies that it is unlikely to be able to make payments owed after November and that state fund Khazanah Nasional will stop funding, forcing it into a winding-down process if restructuring talks with lessors are unsuccessful.

The exercise is targeted at Malaysia-based employees aged 45 and above who have served the company continuously for a minimum of 10 years, including years of service in the Malaysia Airlines group.

Commenting on the move, National Union of Flight Attendants Malaysia president Ismail Nasaruddin said the decision was considered "fair" in view of other airlines' extreme decision to pare down entire operations before offering any separation scheme or compensation.

"They (MAG) are not paying much; the offer is only for three months' salary. If the outcome from this offer doesn't match with the numbers they are looking at, then more drastic measures may be implemented such as termination or retrenchment," he told Bernama based on information gathered from internal sources in MAG. REUTERS

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