Wednesday, May 18, 2022

Tony brushes aside AirAsia’s troubled status as he launches new name

He says AirAsia's PN17 status is an accounting issue.

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AirAsia Group CEO Tony Fernandes today played down concerns about the company’s financial status, saying its classification as PN17 would not stand in its way of continuing to raise capital to fund its operations.

He said the low-cost airline had so far succeeded in raising RM2.5 billion in funds, showing that its PN17 had “zero effect” on the group.

He also said the company had met the criteria to be declared PN17 two years ago but still managed to raise the amount.

“We are raising another RM1 billion in capital,” he said in a press conference at which he also announced that AirAsia had changed its name to Capital A.

In October last year, AirAsia announced that it had received approval for an 80% guaranteed loan of up to RM500 million from Danajamin Nasional Bhd, a financial guarantee insurer under the finance ministry-owned Bank Pembangunan Malaysia.

However, the loan raised questions among aviation industry observers given that the company had been posting losses since the beginning of the Covid-19 pandemic in the country in early 2020.

AirAsia was classified as PN17 on Jan 13 after Bursa Malaysia dismissed its appeal to extend by 18 months its clearance period ending Jan 7.

Speaking today, Fernandes said the PN17 label was an accounting issue.

“The solution has nothing to do with liquidity,” he said. “PN17 was caused by a lease which we never paid, so it shouldn’t be in the profits and losses.

“It’s related to accounting and structuring, which mentions the consolidation of a RM5 billion deficit. If you remove these two factors, we would not be classified as PN17.”

On the company’s growth strategy in the face of financial pressures, Fernandes said he was optimistic and confident of overcoming the issue.

“We’ve done a lot with no money so far,” he said. “I remember when I started AirAsia with Kamarudin (Meranun), we had no money either. We started the airline with half a million ringgit, that was all the money we had.”

He said the company’s vision for the next 10 years would be to transform the aviation business into a brand that will offer lifestyle, financial and travel services.

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