AirAsia seeks $1bn to refinance debt and consolidate balance sheet

AirAsia Group is seeking up to $1 billion in financing to consolidate its debt and strengthen its balance sheet, the airline said on 2 September. The Malaysian carrier plans to raise the funds through international debt markets and about MYR700 million ($173 million) in local credit facilities.

The group said the funding is not for operational shortfalls. The main goal is to combine multiple existing facilities into a single lower-cost debt structure with longer maturities and better terms. AirAsia also intends to refinance higher-cost debt taken on during the Covid-19 pandemic.

AirAsia has already raised about $300 million in March to extend debt tenures and reduce principal obligations. It expects to complete the latest fundraising by the end of the year, according to media reports.

The announcement comes as the airline cuts capacity by up to 25% group-wide for the July-September quarter. AirAsia described the cuts as a deliberate operational strategy, citing typically weaker demand in the third quarter.

The airline has also removed 25 older aircraft from its fleet this year, including 17 early returns. AirAsia said it now prioritises absolute route profitability over raw aircraft utilisation after consolidating short- and medium-haul operations under one group.