AirAsia secures RM300m loan from Sabah Development Bank, aims to create 100k new jobs

AirAsia has confirmed that it has secured a RM300 million loan from Sabah Development Bank (SDB) and disbursed it to its group of companies as part of the fund raising exercise undertaken by the company.

The airline said in a Bursa filing that the loan aims to enhance logistics in Sabah by increasing its supply chain and connectivity, creating over 100,000 new jobs in the process. AirAsia added that the loan is not backed by a government guarantee.

According to the airline, RM10 million will be used to enhance eCommerce platforms and the marketability of Sabah products, while the other RM10 million will be allocated to further promote Sabah tourism destinations on its digital super app airasia.com.

Meanwhile, RM170 million will be used to establish and operate OURFARM digital food supply chain and cold chain facilities in Sabah, while RM110 million will be used to part-finance the project to turn Kota Kinabalu International Airport into an international hub for AirAsia's operations. This comes shortly after The Star reported that an American lender has expressed interest in loaning the airline US$1 billion for the digital assets that AirAsia has amassed over the years.

Like many airlines in the region, AirAsia has fallen on hard times. Two weeks ago, it laid off 10% of its 24,000 employees because it had "too many staff", especially with only 80 out of 245 planes being able to fly at the moment, CEO Tony Fernandes said during a Buletin Utama TV3 interview.

In June, the airline also terminated more than 300 employees, according to a report by Astro AWANI. AirAsia Malaysia CEO Riad Asmat said then that the organisational restructure was a "viable alternative at present" due to the challenging situation.

Separately, the airline's long-haul arm AirAsia X was recently slapped with a RM78 million lawsuit by Malaysia Airports Holdings (MAHB) over outstanding aeronautical charges, which comprise regulated charges by the government, aerobridge charges, check-in counter charges, and late payment charges. MAHB said in a statement that the monies are "to be ploughed back into the business" to sustain the operation of the airport and ensuring the service levels continue to be delivered to the passengers.

AirAsia X also recently proposed a restructuring plan to facilitate an injection of fresh equity which will allow the airline to fly again. The proposed plan includes a debt restructuring scheme, revision of the group's business plan, engagement with business partners and airline customer and travel agents. Despite the challenges, AirAsia said it has not wasted the crisis, but in fact, used the lockdown period to fine tune its platform, unify the user experience and simplify our payment to a one-click checkout. This led to it launching the super app, airasia.com, earlier this month. The super app has 15 types of products and services under three main pillars - travel, eCommerce and fintech. Among the list of categories include flights, hotels, SNAP, activities, insurance, Big Rewards, unlimited deals and wifi. 

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