Story
AirAsia Co-Founder Asserts Strong Liquidity as Shares Hit Multi-Year Lows
Summary
AirAsia co-founder Tony Fernandes stated the carrier has strong liquidity and is on track to raise over $1 billion for refinancing, addressing investor concerns that sent shares tumbling following reports of government contingency planning.
AirAsia co-founder Tony Fernandes said Friday the low-cost carrier maintains strong liquidity to manage rising jet fuel costs, directly addressing investor concerns that have driven its share price to its lowest level since December 2022. Fernandes told reporters the airline expects to raise more than $1 billion by December or January, primarily to refinance existing debt.
"COVID was far, far worse than what we are dealing with now," Fernandes said at a media briefing in Bangkok. "We couldn’t fly then, but we can fly now and our demand is very strong."
Market Pressure and Government Scrutiny
AirAsia shares have fallen approximately 24% since Wednesday, following a report that the Malaysian government had asked rival airlines if they could absorb AirAsia's domestic market share. The inquiry was reportedly part of scenario planning as authorities monitor the financial health of Southeast Asia’s largest budget airline.
In response, Fernandes denied the airline required government assistance. "We’ve never received any government support in the last 25 years. And as of today, we haven’t got any... we do not need rescue, bailout, whatever," he stated. The source material noted that Malaysia’s finance ministry had hired Alton Aviation Consultancy to assess AirAsia’s funding needs.
AdFinancial Position and Strategy
Rising jet fuel prices have created significant headwinds for the airline industry. AirAsia, which has no fuel hedging in place, saw its fuel costs jump 66% in the second quarter to an average of $183 a barrel. The carrier reported current liabilities of 18.4 billion ringgit ($4.52 billion) as of June 30, compared with cash and bank balances of 954 million ringgit.
Fernandes clarified the planned fundraising is for restructuring debt, not for new capital. He detailed that the airline is targeting up to $1 billion from international debt markets and 700 million ringgit in local credit facilities. Despite the financial pressure, he noted strong operational performance, with a load factor of 80% in the third quarter and robust forward bookings.
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