Malaysian tycoon Tony Fernandes’ AirAsia receives $ 120 million in government-backed loan
Air Asia Group– controlled by tycoon Tony Fernandes – said on Tuesday it had received approval from Danajamin Nasional Berhad for a loan of up to 500 million ringgits ($ 120 million), providing the airline with a much needed lifeline to overcome the Covid-19 pandemic.
The loan, which is 80% guaranteed by the Malaysian government, is part of the country’s economic stimulus package to support businesses affected by the pandemic. AirAsia has said it will use the funding for working capital purposes, including personnel costs and key operating expenses such as aircraft maintenance, as the airline prepares to ramp up operations in anticipation. a resumption of national and international travel in the near future.
“This endorsement from the Malaysian government is a strong endorsement of the AirAsia Group’s ability to recover quickly and gives a welcome boost to our overall fundraising strategy as we prepare to return to the skies in all of our key markets.” , Executive Chairman of AirAsia Group, Kamarudin Meranoun, said in a declaration. âCountries around the world, including those in the region, have started to reopen their international borders amid promising advances in immunization rates. “
Airlines and other travel-related industries are among the hardest hit by the pandemic, as countries around the world have closed their borders to contain the virus. AirAsia reported its eighth consecutive quarterly loss in the quarter ended June 30, although losses fell 38% to 719.6 million ringgits from a year ago.
Despite the lingering impact of the pandemic, AirAsia is starting to see green shoots. âThe Langkawi Travel Bubble has been a huge success with overwhelming demand since we launched up to 90 services per week starting September 16,â Kamarudin said. âIn Thailand, Indonesia and the Philippines we are seeing good progress as services have gradually started to pick up. “
With vaccinations progressing well around the world, the International Air Travel Association has also provided a more optimistic outlook for the industry. Demand for international travel is expected to double next year to 44% of the pre-pandemic level, IATA said on Monday.
âAs countries in the region continue to discuss and implement travel bubbles and gradually reopen international borders, we are confident that we can recover and rebound strongly in the near future,â Kamarudin said.
AirAsia previously announced plans to raise up to Ringgit 2.5 billion through borrowing and selling of shares to provide the airline with ample liquidity as Covid-19 travel restrictions resulted in a decrease in passenger and freight traffic. The airline has also turned to digital businesses.
Fernandes and Kamarudin took over AirAsia in 2001 to create a low cost carrier that would make air travel affordable. The two dropped out of this year’s ranking of Malaysia’s 50 richest people. Fernandes also has interests in hospitality, insurance and education.
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