AirAsia to raise $230 Million for Sustainability Development . Malaysian budget carrier AirAsia Group Bhd said it was in talks to raise more than 1 billion ringgit ($235 million) in funds, a day after its auditor cast doubt on its ability to continue as a going concern.
AirAsia said it was considering various fundraising options, including debt and equity, from Malaysian banks and other investors. It has started to lay-off employees, reduce refreshment allowances and is working on extensions with lessors, it said., with a goal of reducing expenses by 30%.
“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. Also, including investment banks, lenders. As well as interested investors in seeking a favorable outcome for the group”. Furthermore, the airline said in a statement.
AirAsia, like other airlines, has been greatly affected by the coronavirus pandemic. The cash flow has been affected with revenue not sufficient to cover the fixed costs. The airline posted a Q1 loss of nearly $200 million, its biggest quarterly loss since 2004.
Equities research firm CGS-CIMB said AirAsia would need 3 billion ringgit in new funding. Since to maintain a healthy cash position. Also adding capital-raising efforts could result in shareholder dilution.
“The depth and duration of the drought in air travel volumes makes it more likely. That lessors will need to make significant adjustments to their fleet investments. If they wish to align with shifts in leased aircraft demand by airlines”. Moody’s said in a statement. “Residual values for certain leased aircraft will significantly and permanently weaken as airlines adjust capacity.”