Fernandes open to assistance for AirAsia, but says no bailout talks

AirAsia Group Bhd co-founder and adviser Tony Fernandes says he would be open to assistance for the airline if offered, maintaining however that there are no discussions with the government on a bailout for Southeast Asia’s largest low-cost airline.

He said the airline survived the Covid-19 pandemic without government assistance and was now dealing with a sharp rise in fuel cost, adding that there was a distinction between a bailout and other forms of assistance that could help a company through a difficult period.

“For me, bailouts are for companies that have been mismanaged and are asking for a cash infusion,” he told podcast host Wong Shou Ning on her new Common Sens programme.

Fernandes rejected the notion that AirAsia fell into that category.

Asked whether he would accept help if offered, Fernandes said: “If someone wants to help us out and they think it’s good for the country, and I think it’s good for the people of AirAsia, why would I not do it?”

Fernandes said AirAsia sought other forms of assistance, including working with Malaysia Airports Holdings Bhd to reduce ground-handling and other costs.

He said Petronas was extending credit to the airline, but did not provide details of the amount of credit or its terms.

Fernandes also said AirAsia was working to ride out the crisis by cutting costs and adjusting its operations to cope with high fuel prices while using AI to reduce fuel consumption and improve revenue.

He said AirAsia’s cost-cutting measures included returning aircraft that consume more fuel, ending routes that are unprofitable at current oil prices, and scaling back growth in Indonesia and the Philippines.

He said AirAsia had to operate on the assumption that oil prices could remain high and “cut our cloth accordingly”.

His comments come days after he denied reports that AirAsia needed government assistance, saying at a media briefing on Sept 18 that the airline remained sustainable and had not asked Putrajaya for a bailout.

Questions over AirAsia’s finances followed a Reuters report on Sept 16 that the government had spoken to Malaysia Airlines and Batik Air as part of contingency planning while monitoring AirAsia’s financial position. Fernandes subsequently challenged suggestions that the airline needed a rescue.

AirAsia reported a net loss of RM831 million in the second quarter amid higher fuel costs and foreign exchange losses. It had RM954 million in cash and bank balances at the end of June.

Fernandes has said the airline expects to raise more than US$1 billion, mainly to refinance existing debt.

Separately, he said he had been asked to provide personal guarantees and extend his contract if he wanted to secure a loan, but he did not identify who made those requests.

He added that while he wanted to move on, “right now, the market wants me to stay”.

Despite AirAsia’s current financial pressures, Fernandes said he believed the airline could recover and emerge in a stronger position.

“We’re going to give it a good shot. I believe we have a good shot at coming out of this stronger as we have weathered many crises before,” he said.

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