Sunday, May 26

AirAsia obtains a US$150 million term loan with parent Capital A’s guarantee

The aviation division of Capital A Bhd, AirAsia Bhd, has obtained a five-year term loan for up to US$150 million (about RM708.46 million).

According to Capital A’s bourse statement, the loan will be used to pay for working capital and the upkeep of its aircraft and engines.

Shortly before Capital A was scheduled to submit its regularisation plan to the stock exchange on October 7, the term loan was secured.

The term loan was given by a financial institution with a corporate guarantee from Capital A, which will continue for the duration of the term loan, according to a bourse filing by Capital A Bhd.

“The board of directors of the company, having considered all aspects of the term loan, is [of] the opinion that the term loan is in the ordinary course of business and is in the best interest of the group,” it said.

According to Capital A’s most recent financial statement, as of June 30, 2023, its total borrowings were RM724.97 million, while its cash balances were RM735 million.

After its external auditor Messrs Ernst & Young PLT raised significant doubts about the airline’s ability to continue as a going concern in its audited financial statements for the fiscal year ended December 31, 2019, and as its shareholders’ equity declined below 50 percent of its share capital, Capital A slipped into PN17 status in January 2022.

On Tuesday, Capital A’s shares fell 1.5 sen to 96 sen, valuing the company at RM4.05 billion. Year to date, the stock has increased by 47.7 percent.

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