Malaysia’s AirAsia X to apply for $120mn gov’t-backed loan

In its unaudited quarterly report for the three months ending June 30, released on September 27, AirAsia X (D7, Kuala Lumpur Int’l) revealed that it plans to apply for a state-backed loan of up to MYR500 million ringgit (USD119.5 million) under the Danajamin Prihatin Guarantee Scheme (DPGS), launched last year to keep the Malaysian economy moving during the pandemic.

“This application is subject to a credit assessment, final evaluation, and approval from the relevant financial institutions. At present, the company is in discussion with a financial institution to secure the DPGS loan,” the AirAsia Group low-cost long-haul carrier said in its notes to the accounts.

The DPGS guarantee scheme, worth MYR50 billion (USD11.9 billion), covers up to 80% of the loan amount for financing companies’ working capital requirements for a period of up to ten years. Under an update to the scheme announced in February, the availability period to apply was extended to the end of 2021 and the maximum financing amount was raised from MYR500 million to MYR1 billion (USD239 million).

AirAsia X posted a net loss of MYR24.63 billion (USD5.88 billion) for the April 1 to June 30 quarter, on just MYR72.26 million (USD17.25 million) in revenue.

It stressed that during the period the company “suffered the full impact of the Covid-19 pandemic, and with the suspension of scheduled flight operations since April 2020 and the parking of the majority of the aircraft fleet, the performance indicators for the business are not meaningful.” A tabular presentation of revenue and cost metrics was omitted from the report, “as there is no like-for-like comparison to the same quarter of 2020.”

In its notes to the unaudited accounts, the carrier added that the validity of the going concern assumption in its last annual report has been dependent on its “ability to gradually resume scheduled flight operations on a staggered basis starting early 2021 and its ability to return to profitability which requires the successful implementation of the management’s plans to obtain continued support from aircraft lessors, maintenance service providers, and financial institutions. Should the going concern basis for the preparation of the financial statements be no longer appropriate, adjustments will have to be made to state the assets at their realisable values and to provide for further liabilities which may arise.”

As previously reported, on September 15 Malaysia’s High Court granted AirAsia X a further extension of a restraining order on 15 of its creditors, which it had allowed in February to assist the carrier with its ongoing restructuring and hold meetings with the creditors.