AirAsia seeking govt loan
In this article (4)
Airasia may have enough cash to last them for most of 2020 but it is currently seeking out a loan from the Malaysian government to cushion the impact from the challenging economic environment.
The low-cost carrier’s chief executive officer Tan Sri Tony Fernandes(pic) said there was no need for bailouts and what most airlines were looking for were loans.
“We think the cash will last us for the most part of this year and when the sales return, then we’re okay.
“It’ll be great to get a loan as well and we’re working on that with our government. We think liquidity is available in Malaysia and Thailand, ” he told Bloomberg Markets in an interview.
And amidst the tough environment that airlines are operating in, Fernandes remained optimistic, adding that AirAsia was lucky to have restructured its business a lot and moved towards the digital end.
He also said the airline’s cost structure is robust enough and the group is restructuring further.
He admitted that the coronavirus disease (Covid-19) pandemic was currently the worst crisis he has ever been through.
“We have a lot of ideas to get going again.
“It’s going to be an uphill slog but we remain optimistic. It’s always better to have more cash.
“We have enough at the moment but we’ll be very happy to raise some.
“And it’s about getting our planes flying again, that’s the most important thing right now.
“Growth will come later, ” he said.
Fernandes also said that AirAsia had made its representations to the government and he was sure that something would come out.
““We think the cash will last us for the most part of this year and when the sales return, then we’re okay.”
“Tourism is 15.8% of the gross domestic product (GDP) and AirAsia itself is 1.8% of that GDP.
“So we’re sure our suggestions will be listened to, ” he said.
On its non-airline businesses such as e-wallet, F&B and cargo, Fernandes said the businesses were doing very well and the beauty was, they did not burn a lot of cash on that side.
He added that they were far from others but the challenging environment currently might give them the chance to catch up.
Asked about the talks of a merger between AirAsia and Malaysia Airlines, Fernandes said he was not aware of it as AirAsia was just focussed on getting themselves in order as he had never looked at mergers and acquisitions as a solution.
“But at this point, we’ll keep all options open, but it’s not being discussed at the moment.
“I think it will be very silly of me and the board to close all options, ” he said.
On the long haul carrier AirAsia X Bhd, Fernandes said it was doing very well over the last fourth quarter and the beginning of January prior to Covid-19.
He said it was rationalizing its fleet and most of AirAsia X’s flights have become medium-haul.
“We’re changing the fleet, we’re bringing down routes to shorter distances and we think we’ll be beneficiaries in some ways because people want to save some money.
“When we return, a low-cost product would be more viable and we think in the immediate future, travel will be very regional and won’t be cross-continental so we think we’re in a good spot, both AirAsia and AirAsia X, ” he said. Asked if there were any considerations for AirAsia to switch from Airbus’ A330 to Boeing’s 787, Fernandes replied no, stressing that AirAsia has an “interesting relationship” with Airbus and it has a large order book with them.
“Whether its Boeing or Airbus, I can’t see anyone taking new planes at least for a while. I don’t think any airline is looking at growth right now.
“The airline industry has to recover, numbers have to come down and business models will have to change. The world is changing but we’re prepared. You can put your head in the sand and cry or you can get up there and do something, ” Fernandes said
Questions & Answers
Q.Why is AirAsia seeking a loan from the Malaysian government?
Why is AirAsia seeking a loan from the Malaysian government?
AirAsia is seeking a loan to help cushion the impact from the challenging economic environment. While they have enough cash for most of the year, a loan would provide additional liquidity.
Q.How does AirAsia's CEO view a potential merger with Malaysia Airlines?
How does AirAsia's CEO view a potential merger with Malaysia Airlines?
The CEO is not aware of any current discussions regarding a merger, as AirAsia is focused on its own restructuring. He stated that all options would be kept open, but it is not being discussed at the moment.
Q.What is AirAsia's strategy for its long-haul carrier, AirAsia X, moving forward?
What is AirAsia's strategy for its long-haul carrier, AirAsia X, moving forward?
AirAsia X is rationalising its fleet and changing routes to shorter distances, focusing on medium-haul flights. The airline believes this low-cost, regional travel model will be more viable immediately after the crisis.
Reader pulse
Is AirAsia's loan request a smart move?
18,625 votes so far