July 9, 2020 / 2:31 AM / in a month

Malaysia's AirAsia seeks nearly $500 million in funding - report

KUALA LUMPUR (Reuters) - Malaysia’s AirAsia Group Bhd is looking to raise 2 billion ringgit ($469 million), its CEO was quoted as saying by the Nikkei Asian Review on Thursday, a day after its auditor cast doubt on the airline’s ability to continue as a going concern.

AirAsia planes are seen parked at Kuala Lumpur International Airport 2, during the movement control order due to the outbreak of the coronavirus disease (COVID-19), in Sepang, Malaysia April 14, 2020. REUTERS/Lim Huey Teng/Files

The budget carrier, like other airlines, has been rocked by the COVID-19 pandemic that has hammered demand for air travel. Its auditors said AirAsia’s financial statements and current industry conditions indicated material uncertainties that could raise doubts about the company’s future prospects.

AirAsia (AIRA.KL) said in a statement some financial institutions had indicated they would support a funding request of over 1 billion ringgit and that it was also considering various fundraising options, including debt and equity.

In an interview with the Nikkei Asian Review, Chief Executive Tony Fernandes said the airline would look to raise a total of 2 billion ringgit in the next six months.

“At 1 billion ringgit, we are comfortable. But if we can raise 2 billion ringgit, we would be in a very comfortable position,” Fernandes said in the interview.

Part of the funding would come from a share offering within the next six months, Fernandes said, adding the new shares would be placed with a third-party investor.

Fernandes also said AirAsia could return to profitability next year.

He denied speculation the airline was looking to exit its joint ventures in India and Japan.

India’s Business Standard newspaper reported on Thursday, citing banking sources, that Indian conglomerate Tata Sons [TATAS.UL] was in talks to buy out AirAsia’s stake in their airline joint venture in India at a steep discount.

AirAsia said earlier on Thursday it was looking to at least halve cash expenses this year and that it had begun to cut jobs and salaries to save costs.

Earlier this week, the airline posted a first-quarter loss of nearly $200 million, its biggest quarterly loss since its 2004 listing.

Reporting by A. Ananthalakshmi and Jamie Freed in Sydney; Editing by Himani Sarkar and Mark Potter

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