AirAsia says it can meet Indonesia’s negative equity rules
AirAsia Group’s CEO Tony Fernandes remains bullish that its Indonesian airline subsidiary will not be grounded due to negative equity issues.
"We have no problem complying with the transportation ministry’s requirement. We won’t be frozen," Fernandes said, in reference to a ruling by the ministry that airlines with major debt could be blocked from flying.
Transportation Minister Ignasius Jonan extended a deadline to September 30 for 11 airlines, including Indonesia AirAsia, to secure funds to keep flying.
"We have found so many great places in ASEAN, including Indonesia, that we can develop," Fernandes said, adding that Indonesia represents more than 25% of passenger numbers for AirAsia Group, which also operates separate businesses Malaysia, Thailand, the Philippines, India and starting next year, Japan.
Until the equity rule is met, AirAsia will not be able to apply for additional routes in Indonesia.
The company is again considering a bond issue to bring in the required funds.
"We will consider other options, including a bond issuance. The shareholders meeting is being arranged," said Indonesia AirAsia president director Sunu Widyatmoko.
He said a planned public offering already announced will not be brought forward.
Minister Jonan said no further grace period will be extended for the 11 airlines in negative equity, but they will likely not be grounded if they present balance sheets and a realistic short term strategy to improve the bottom line.
Fernandes, who was in the Indonesian capital Jakarta to celebrate AirAsia’s 300 millionth passenger, said the company was a major driver of tourism and jobs in the country.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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