Malaysian Low-cost airline, AirAsia Group announced that it was seeking to raise at least $602 million by the end of 2020, to sustain the group after suffering a painful loss caused by COVID-19.
A multi-national airline group said, it is expecting to survive the present economic downturn by raising up to $362 million from the bank loans and the rest $240 million from the Group investors.
The airline spokeswoman on Tuesday, revealed that the airline may borrow up to 1.5 billion ringgit from banks and another 1 billion ringgit from investors and are also in talks with local and foreign investors including private equity firms, strategic partners and conglomerates, she said.
In August 2020, the financial AirAsia’s report showed that the company lost almost $241 million, it is the company’s largest quarterly loss on record. While AirAsia has resumed its domestic operations in April 2020, the Group’s long-haul unit AirAsia X still does not perform any operations.
According to a statement by Tony Fernandes, Airasia CEO, in an interview with Reuters, “The financial injections could have a significant impact to keep the company on the market. He noted that investors were considering to include private equity players as well as both local and foreign strategic partners into the financial rescue.
However, it is not only the impact of the current pandemic that tortures the Group’s financial stability. In August 2020, AirAsiaX and its subsidiary received a letter of a material litigation claim filed in the High Court of Justice in the Business and Property Courts of England and Wales. Airline leasing company BOC Aviation sued AirAsia X and its wholly-owned subsidiary AXX Leasing Two for $23 million, claiming outstanding amounts due under lease agreements.
South Korea’s SK Group in June said, that it was in talks to buy a small stake in AirAsia, without providing further details. AirAsia has also cut the salaries of management, trimmed jobs and deferred plane deliveries in an attempt to shave costs by 30% this year.
AirAsia is also evaluating its operations in Japan and will make a decision very soon, the company’s spokeswoman said Tuesday. Its India venture remains as it is, she said without elaborating. The airline is looking to consolidate and strengthen its business in Southeast 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 AAX Leasing Two Ltd. have received a claim from BOC Aviation Ltd. regarding $23 million of outstanding amounts due under lease agreements, according to an exchange filing Friday. AirAsia X, which said it is seeking legal advice, leases four aircraft from BOC.
AirAsia is one of Airbus SE’s major customers for A320s while AirAsia X is the world’s biggest customer of Airbus A330neo planes. AirAsia X has 78 of the aircraft on order, according to Airbus’s website, and has already deferred delivery of some A330neos.