Shares of the Malaysian-based airline fell by more than 17% on 8th July after being halted earlier in the day.The future of Asia’s biggest budget airline, Air Asia, is in “significant doubt”, auditor of E&Y has said. The airlines industry has been hit hard due to corona virus and its strict travelling rules.
E&Y highlighted the airline’s huge debts in a statement to the Kuala Lumpur stock exchange late on Tuesday.It said Air Asia’s current liabilities exceeded its current assets by 1.84bn ringgit ($430m; £340m) at the end of 2019.
Air Asia Group Bhd on 9th July said it was in talks to raise more than 1 billion ringgit ($234.52 million) in funds, a day after its auditor cast doubt on its stability and future.
AirAsia is considering various fund raising options, including debt and equity, and looking to at least half its cash expenses this year. “We have been presented with proposals in various forms of capital raising, be it debt or equity, and are in ongoing discussions with numerous parties, including investment banks, lenders, as well as interested investors in seeking a favourable outcome for the group,” the airline said while making a statement. Some financial institutions have indicated they would support a funding request of over 1 billion ringgit, it said.Malaysian government guarantee loan programme will invest in a part of funding, AirAsia said, adding its subsidiaries in the Philippines and Indonesia have also applied for loans. The airline has begun to lay off jobs and salaries to save costs, and is working on extensions with lessors, it said. Earlier in this week, the airline posted a first-quarter loss of nearly $200 million, its biggest quarterly loss since the 2004 listing.It has also sought payment deferrals from suppliers and lenders and halted all deliveries of Airbus SE jets this year. Equities research firm CGS-CIMB said, Air Asia will need 3 billion ringgit in new funding to maintain a healthy cash position, adding capital-raising efforts could result in shareholder weakening. Air Asia’s shares rose 5%, after falling as much as 17% in the previous session.