AirAsia co-founder says airline has enough cash and rules out state rescue

Tony Fernandes, AirAsia's co-founder, said the low-cost carrier has enough cash to ride out a difficult operating environment and rising global fuel costs. At a press conference in Bangkok, he dismissed reports of possible government plans to support its domestic operations.

Fernandes said the airline knows how to manage its cash flow, aiming to ease investor concern about its financial health. AirAsia expects to raise more than 1 billion dollars by December or January, mainly to refinance existing liabilities.

It is in talks to raise up to 1 billion dollars in international debt markets, along with 700 million ringgit in local credit facilities. Discussions are also under way with a major global bank for a bond issue, and it has signed a term sheet with a Middle East investor for 1 billion dollars, subject to due diligence. It is waiting for more favourable conditions.

Fernandes said the refinancing is meant not to raise fresh capital but to cut financing costs.

As of 30 June, AirAsia's current liabilities stood at 18.4 billion ringgit, about 4.52 billion dollars, against cash and bank balances of 954 million ringgit.