THE RM300 million loan secured by AirAsia from Sabah Development Bank during the Covid-19 pandemic in 2020 has proven beneficial for both the budget airline and the state of Sabah.
Capital A chief executive officer Tan Sri Tony Fernandes said Sabah continues to reap the benefit of the airline’s sustainability and projects funded by the borrowing.
“We have paid half of it (the loan) already. We have done flights here and there, we did our grocery, and a lot has been done. There is no issue… look what we have done. If AirAsia went bankrupt, then Sabah would be worse off, right?”
“We hope instead to get more loans so we can do more. We have done so much for Sabah,” he told reporters in Kota Kinabalu today.
His comments came in response to recent revelations during the Sabah assembly sitting, where it was disclosed that peninsula-based firms made up part of the RM2.2 billion in non-performing loans accumulated by Sabah Development Bank over the years.
Sabah Finance Minister Datuk Seri Masidi Manjun disclosed that 60% of the Sabah Development Bank loan portfolios consist of peninsula-based companies, and the government is committed to pursuing payments from these entities.
Masidi had said this In response to Sabah opposition leader Datuk Seri Mohd Shafie Apdal who expressed concerns whether the debts would be written-off by the Sabah government.
Shafie had indicated this while drawing the benefits from the loan given to AirAsia when he was Sabah chief minister.
AirAsia currently holds 75% of the Sabah’s aviation market, operating 21 routes from the state, with 331 flights weekly. The company flies around six million passengers via Sabah each year.
Fernandes also revealed plans to introduce Kota Kinabalu-Seoul, Jakarta, and Tokyo routes soon.
The 300 million loan was used to establish OurFarm’s (AirAsia’s agriculture e-commerce platform) digital food supply chain and cold chain facilities in Sabah (allocation of RM170 million) and part finance a project to turn Kota Kinabalu International Airport into an international hub for AirAsia Bhd (RM110 million).
A sum of RM10 million will be used to enhance e-commerce platforms and marketability of products from Sabah and another RM10 million to further promote the state’s tourism destinations on airasia.com, its digital super app.
The loan is viewed as a lifeline for AirAsia as it was struggling to keep afloat when the country’s aviation industry was badly affected by the Covid-19 pandemic.
The company trimmed some of its 24,000 employees at the time.
When asked about steep ticket prices, Fernandes explained the challenges the airline faces due to 70% of operating costs being in US dollars.
He also pointed out the company’s 92% load factor, which reflects that AirAsia still maintains a low-price fare compared other carriers. – The Vibes, December 4, 2023.
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