Business

AirAsia shares slide on financial worries

AirAsia chief executive Tony Fernandes Image copyright AFP
Image caption Shares of AirAsia in Kuala Lumpur have been down 30% since 10 June

Shares of Malaysian budget carrier AirAsia fell as much 13% on Wednesday, despite the airline defending its finances and accounting practices.

Investors become concerned after little-known firm GMT Research issued a report on 10 June, saying the airline used transactions with associate firms to increase earnings.

Since then, its shares have fallen almost 30%, according to Reuters.

AirAsia responded to the claims, but that did little to reassure investors.

It made its first official response to the slide in shares on Wednesday in a filing to the stock exchange, saying the management wanted to assure investors that it had "a solid footing, strong balance sheet, [is] rich in assets and [has a] good business outlook".

Asia's biggest low-cost airline added that its accounts were transparent and in accordance with local and international accounting standards.

Chief executive Tony Fernandes also told Reuters at the Paris Air Show that the airline had "so many" cash raising opportunities in its fleet, investments and national cash operations that it did not need a capital increase.

But earlier this week, Mr Fernandes had written to investors that the company planned to raise almost $300m (£190m) from bond issues at its loss-making subsidiary in Indonesia and the Philippines.

He said the airline would sell and lease back up to 20 planes.

AirAsia was involved in a deadly crash in December when one of its carriers crashed into the Java Sea off of Indonesia, killing all 162 people on board.

Its shares have erased some of the earlier losses in volatile trade and were down almost 8% in the afternoon.

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