AirAsia, owned by Malaysian tycoon Tony Fernandes, To Raise Up To $604.6 Million Due To Mounting Losses
AirAsia Group intends to raise up to 2.5 billion ringgit ($604.6 million) this year through borrowings and share sales to ensure the carrier has sufficient liquidity to weather the negative impact of the Covid-19 pandemic.
The airline, which is controlled by tycoon Tony Fernandes, reported a seventh consecutive quarter of net losses on Thursday, as travel restrictions and the Malaysian government’s lockdown to contain the spread of the pandemic weighed on sales. According to the company’s filing with Bursa Malaysia, it lost 767.4 million ringgit in the first quarter, down from 803.8 million ringgit a year ago.
AirAsia has already raised 336 million ringgit this year through two tranches of private share placements and is in discussions with financial institutions and lessors to restructure existing aircraft lease arrangements. Additionally, the company is in talks with potential partners who may invest in specific segments of the group’s business.
“Through these various fundraising efforts, the group anticipates having sufficient liquidity to sustain business operations,” the company stated in a statement.
Airlines and other travel-related industries have been particularly hard hit by the pandemic, as countries worldwide have closed their borders in an attempt to contain the virus. As infections continued to rise in Malaysia, AirAsia reported a 91% decline in revenue to 205.1 million ringgit from a year ago.
“Even if borders remain closed, the group is well prepared to operate entirely within the United States this year,” it stated. “At this point in time, as we await developments regarding international air travel, we remain focused and committed to further strengthening our domestic position.”
Fernandes and his business partner, Kamaruddin Meranun, acquired AirAsia in 2001 with the goal of creating a low-cost carrier that would make flying affordable to the average person. When the Malaysian Rich List was last published in March of last year, he had a net worth of $335 million. Fernandes, 57, is also involved in the hospitality, insurance, and education industries.