AirAsia seeks Ares-backed loan changes to ease aircraft lessor payments
AirAsia Group is seeking changes to the terms of a $200m private credit facility provided by Ares Management and Indies Capital Partners as the airline looks to improve the flow of payments to aircraft lessors, according to a report by Bloomberg citing unnamed people familiar with the matter.
AirAsia Group is requesting modifications to the terms of a $200 million private credit facility provided by Ares Management and Indies Capital Partners. This move aims to alleviate the burden of aircraft lessor payments for the Malaysian carrier, according to Bloomberg's report citing anonymous sources. The airline has approached the lenders to permit the sharing of revenue from certain flight routes with aircraft leasing companies to which AirAsia owes money.
Currently, the revenue from these routes is pledged as collateral for the private credit facility. Such a change could offer aircraft owners better insight into future payments, according to the sources. However, any amendment would necessitate approval from both Ares and Indies, and discussions might not lead to an agreement. AirAsia, Ares, and Indies have not commented on the matter.
The airline is grappling with financial strain due to two consecutive quarterly losses. Rising energy prices, exacerbated by the US-Iran conflict, have escalated operating costs, while limited fuel hedging has left AirAsia particularly vulnerable to the price surge. Consequently, the carrier has sought delays in some aircraft lease payments.
Additionally, AirAsia is exploring additional financing options, such as up to $1 billion in international debt and MYR700 million ($172 million) from the domestic credit market. Earlier this month, the company announced plans to consolidate its borrowings into a single, lower-cost financing structure featuring longer maturities and improved terms.
The existing $200 million private credit facility is part of a broader $443 million dual-tranche financing raised in 2024, which was utilized to refurbish grounded aircraft post-pandemic and refinance lease obligations, with future ticket sales from key routes serving as collateral. AirAsia has already repaid most of the $243 million in lease liabilities included in the initial financing structure, as per anonymous sources.
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