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KUALA LUMPUR (Oct 13): The Ministry of Finance (MoF) has denied approval of any government financing or guarantee to any airline in response to a report that low-cost carrier AirAsia Group Bhd had obtained government credit.
“The MoF would like to clarify that it has not approved any government funding or guarantees for any airline,” said an authorized MoF spokesperson.
Nikkei Asia reported today that AirAsia Group had obtained a RM1 billion (US $ 242 million) loan from the Malaysian government.
The news agency quoted sources close to the Finance Ministry as saying that the loan, which will be 80% guaranteed by the Finance Ministry, would be granted by a group of local banks under a government scheme to help companies to deal with the consequences of Covid-19.
The news portal also said that the fund is vital for AirAsia to use to repay short-term loans and finance working capital.
In early July, the low-cost carrier, which has been hit by the Covid 19 pandemic, said it intended to raise 2.4 billion ringgit to ease its meager cash flow.
He indicated that he would get up to RM1 billion from financial institutions while raising RM1.4 billion of capital.
“The group and company plan to raise capital of up to RM1.4 billion when necessary to strengthen their capital and liquidity base and look forward to the successful implementation of these capital raising plans,” the airline said.
On October 5, AirAsia Group announced that its 33% -owned associate AirAsia Japan Co Ltd was ceasing operations due to “highly challenging operating conditions.”
AirAsia Group has also been reported to have stopped funding its Indian subsidiary as the budget airline struggles to grow amid the pandemic.
At 2.32pm, AirAsia Group’s shares were up 6.72% or 4 sen to 63.5 sen, valued at RM2.12 billion.
Read also:
AirAsia said to stop funding Indian companies as cash dwindles
AirAsia Japan ceases operations
AirAsia says it aims to raise RM2.4 billion through debt and equity
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