AirAsia Shares Slump to Five-Year Low on Indonesia Deadline

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AirAsia Bhd., the region’s biggest budget airline, plunged to its lowest level in five years in Kuala Lumpur trading after Indonesia’s government gave the company’s local affiliate a deadline to have a positive equity position.

The stock closed down 12.8 percent at 1.30 ringgit Wednesday, after falling as much as 15.4 percent earlier in the day. The shares have dropped 52 percent this year.

AirAsia Indonesia, 49 percent owned by the Malaysia-listed parent, must have a “positive equity position” by July 31, according to a ruling by Indonesia’s transport ministry.

AirAsia Indonesia is at risk of losing its license if authorities enforce the deadline for all airlines to have positive shareholder funds, CIMB Group Holdings Ltd. analyst Raymond Yap wrote in a report Tuesday.

In a statement to the stock exchange Tuesday, AirAsia said the Indonesian unit is meeting with the government on its equity position. The government directive has “no immediate effect on operations,” the carrier said.

Indonesia’s transport ministry met July 1 with representatives of 13 airlines that had negative equity positions, according to Tempo.co, an Indonesian news website.

The airlines were given 30 days to return to a positive equity position, Hadi Mustofa Djuraid, a special assistant at the ministry, said by telephone Wednesday. Their options range from capital injections to mergers, but no extensions will be given beyond the July 31 deadline, he said.

If an airline doesn’t have positive equity by then, “we will revoke their operating permit. It will affect their whole operation,” Djuraid said.

Sunu Widyatmoko, AirAsia Indonesia’s president director, said any suggestion the airline could lose its license was “not accurate.”

“The level of our equity has never been an issue as the company has been fully funded through a variety of sources,” he said in an e-mailed statement Wednesday.

He added that the Malaysian parent had announced plans to raise the Indonesian carrier’s share capital and conduct an initial public offering of its shares.

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