Finance Ministry denies approving or securing loan for any airline

An AirAsia plane is pictured on the tarmac of the Kuala Lumpur International Airport in Sepang August 20, 2019. — Picture by Miera Zulyana
An AirAsia plane is pictured on the tarmac of the Kuala Lumpur International Airport in Sepang August 20, 2019. — Picture by Miera Zulyana

KUALA LUMPUR, Oct 13 — The Ministry of Finance (MOF) said it has not approved or backed any loan to any airline after a news report claimed the AirAsia Group has secured a government-guaranteed RM1 billion credit line.

A spokesman issued the denial on the ministry’s behalf.

“The Ministry of Finance would like to clarify that it has not approved any government financing or guarantee to any airline,” the official said.

Earlier, Nikkei Asia reported its sources as claiming that Tan Sri Tony Fernandes’s AirAsia Group has secured a RM1 billion commercial loan under the Danajamin Prihatin scheme, purportedly with the MoF guaranteeing 80 per cent of the sum.

The sources also said the government initially agreed to only half the amount before relenting to the full billion ringgit sought.

They said AirAsia needed the funds to repay short-term loans and for capital expenditure.

The report said that the disbursement is expected next month just as AirAsia also recently announced that the carrier will embark on another round of job cuts next month, according to another source quoted in the report.

The group has already cut more than 10 per cent of its workforce and plans to downsize its fleet of aircraft to try to contain costs.

In an interview with Nikkei Asia in July, Fernandes reportedly revealed that the airline needed to raise RM2 billion in the next six months to be in a “very comfortable” position.

Fernandes did not respond to queries from Nikkei Asia seeking comment.

The Danajamin Prihatin Scheme was introduced by Prime Minister Tan Sri Muhyiddin Yassin to provide financial assistance to companies affected by the coronavirus pandemic. The government guarantee is for the first five years of the financing period.
On Friday, it was also reported that more than 2,400 AirAsia employees were laid off since Malaysia’s borders were closed in March.

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