Malaysia weighs low-risk aid for AirAsia

Detailed summary

Malaysia is weighing how to support AirAsia without risking public funds and will not simply pump money into the private airline, said Anthony Loke, who re ...

Malaysia is weighing how to support AirAsia without risking public funds and will not simply pump money into the private airline, said Anthony Loke, who resigned this week as the nation’s transport minister. The finance ministry, not the transport ministry, is still reviewing various options to financially aid Southeast Asia’s largest low-cost airline as it grapples with high jet fuel prices and currency swings, Loke told Reuters, citing discussions at cabinet meetings.

AirAsia, unlike state-owned Malaysia Airlines, is a private company, Loke said, and any support would have to take a regulated form. “It has to be a formal kind of arrangement,” he said. “Government is not going to pump in money just like that.” He declined to provide details about the options under consideration and said Prime Minister Anwar Ibrahim, who is also finance minister, would decide on any conditions.

The finance ministry and AirAsia did not respond to requests for comment.

Loke made the remarks in an interview on Wednesday, a day after he resigned in protest of a High Court decision that allowed former Prime Minister Najib Razak to be released from prison and serve under house arrest the rest of his sentence over his role in the 1MDB scandal. AirAsia, which controls about 60% of Malaysia’s domestic aviation market, had current liabilities of 18.4bn ringgit ($4.52bn) as of June 30.

With AirAsia, the Malaysian government is aiming to strike the right balance, Loke said, “without jeopardising public funds, but at the same time maintaining air connectivity, which is important.”

Tengku Zafrul Aziz, a senior political adviser to Anwar who chairs the Malaysian Investment Development Authority, said in a separate interview that any government rescue of a private company must protect the business and its workers, not its shareholders.

The right policy for any government “is not to interfere in the commercial sector,” Zafrul said, adding that any government support for a company considered strategic to…

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