Malaysia hires aviation adviser to review AirAsia funding position

Dhaka: Malaysia’s Finance Ministry has brought in Alton Aviation Consultancy to examine AirAsia’s financial and funding requirements as the low-cost carrier faces growing liquidity pressures, reports cited people familiar with the matter.

The appointment indicates that the government is assessing the potential economic impact of AirAsia’s financial situation and whether any form of support may be appropriate. The airline is a major employer and provides low-cost air links across Southeast Asia.

Reports cited one source saying AirAsia could need government backing of some kind to secure new funding from outside investors, although no decision has been made. Another said officials were reviewing the airline’s finances and assets but were not currently preparing a bailout or government guarantee.

AirAsia reported a net loss of RM 831 million for the second quarter, hurt by higher fuel expenses linked to the Middle East conflict and foreign exchange losses.

The carrier is pursuing a restructuring plan that includes cutting weak routes, returning 25 older aircraft and renegotiating supplier agreements.

It is seeking as much as USD 1 billion through international debt markets and RM700 million in local credit facilities, mainly to restructure existing obligations.

With current liabilities of RM 18.4 billion against RM 954 million in cash and bank balances, some sources questioned whether the planned fundraising would be sufficient.