PUTRAJAYA has extended an RM1 billion loan to AirAsia, as the low-cost carrier struggles with the fallout from Covid-19, reports Nikkei Asia.

A consortium of local bankers will disburse the loan under the government’s Prihatin economic stimulus package, said the business daily, with the Finance Ministry guaranteeing 80% of the amount.

AirAsia and its long-haul arm, AirAsia X, confirmed  the retrenchment of 10% of their 24,000 employees last week.

This is a second round of layoffs as it fights for survival in an industry severely affected by the Covid-19 crisis.

AirAsia Group CEO Tony Fernandes said the termination must be undertaken given the reality of the aviation sector.

“The RM1 billion is deemed very crucial for AirAsia, to be utilizsd for repayment of short-term loans and fund working capital,” Nikkei quoted a source close as saying, with disbursement expected next month.

In July, Fernandes told Nikkei that the airline needed to raise RM2 billion in the next six months to be in a “very comfortable” position.

AirAsia is also looking to release its fleet of aircraft to its lessors. It is also in talks with Airbus to reduce pending orders of narrow-body A320 and A321 aircraft as well wide-body A330.

In August last year, AirAsia inked agreements with Airbus for the order of 42 new aircraft, comprising 12 A330neo and 30 A321XLR for its long-haul carrier AirAsia X, for a combined value of more than US$5 billion (RM20 billion). – October 13, 2020.