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Government denies approving $242 million loan to AirAsia Group

The Malaysian Ministry of Finance denied a media report claiming that the government of the country has granted a $242 million (RM 1 billion) loan as a lifeline to AirAsia Group. The Ministry of Finance stated that none of the airlines has received any of state-owned loan guarantees yet.

On October 13, 2020, Nikkei Asia, a local Malaysian news media, reported that AirAsia Group had allegedly secured a state-guaranteed loan of $242 million (RM 1 billion) in order to help the struggling company to deal with financial consequences related to COVID-19 travel restrictions. However, the sources of the report were unidentified.

The report claimed that the government-backed loan for AirAsia Group would be 80% guaranteed by the Ministry of finance and paid out by a group of local banks under a special governmental scheme. The state-guaranteed loan allegedly had to be disbursed to the company in November 2020. There were speculations that the loan ostensibly had to be used for AirAsia’s short-term loan repayment and the airline’s capital expenditure.

Meanwhile, a few hours after publishing the statement, the spokesman of the Ministry of Finance clarified that the government has not approved neither financing nor loan guarantee to any airline.

According to the financial report, AirAsia Group suffered a $188 million loss for the first quarter of 2020, battered by a collapse in air travel demand resulting from the pandemic. Earlier in October 2020, AirAsia Group shut down its operations in Japan due to challenging operating conditions and financial difficulties. 

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