AirAsia, which carries an estimated 60 per cent of Malaysia’s domestic passengers, posted a net loss of RM830.5 million in a single quarter. It is saddled with current liabilities of RM18.4 billion – obligations that are due or expected within a year – and holds just about RM954 million in cash and bank balances.
Its equity is also thin at RM483 million and unless the state provides some sort of insurance, AirAsia’s campaign to secure new funding to refinance its debt-load is likely to be protracted.
Kuala Lumpur has written a similar policy before.
In 2021, a government-linked financial guarantee insurer known as Danajamin Nasional arranged a RM500 million facility for AirAsia that was priced on commercial terms and largely served as what bankers described as a “backstop” to help manage its cash flow and liquidity woes during the pandemic recovery phase. AirAsia did not take it up due to objections to some conditions attached to it.
Bankers tracking the AirAsia financial crisis say the options before the Anwar government include guaranteeing a slice of the refinancing on commercial terms, a move that would give potential lenders confidence to participate in the airline’s financial restructuring.
The government could also impose other conditions, such as only providing assistance with shareholders agreeing to withhold dividends and bonuses as long as the guarantees are in place.
Done this way, Malaysia would still be protecting its skies without the risk of repeating past mistakes.