Reuters/Jakarta/Kuala Lumpur


Indonesia’s transport ministry said it would help airlines struggling to meet a deadline to improve their finances, softening its stance after concerns about the measures sent AirAsia Bhd’s shares plunging to five-year lows.
Ministry officials had told reporters less than a week ago that 13 airlines including the Indonesian affiliate of troubled Malaysian budget carrier AirAsia had to repair their stretched balance sheets by the end of July or risk being shut down.
Yesterday, the ministry issued a statement saying it would “help and support” these airlines to improve their finances, but did not mention anything about shutting them down.
A spokesman told Reuters the ministry would “decide in the future” on that matter. Worries that the Indonesian affiliate of AirAsia would be grounded heightened investor concerns about Asia’s biggest low-cost carrier which has been hit in recent weeks by questions over accounting that the airline rejected.
On Wednesday, AirAsia shares fell more than 15% to five-year-lows. Its shares fell a further 2.3% yesterday, underperforming the benchmark index which was up 0.4%.
AirAsia Group CEO Tony Fernandes, speaking to reporters in Singapore, welcomed the latest Indonesian statement. “There are no financial difficulties in Indonesia,” he said. “We have said that it needs funding and we are going to clean it up. But you can’t arrange funding in three weeks.”
Investors have frequently identified regulatory uncertainty in sectors ranging from mining to water supply as one of the key obstacles hampering the development of Southeast Asia’s biggest economy.