Kuala lumpur: AirAsia Group Bhd has secured a signed term sheet for US$1 billion in financing from the Middle East, but the group is currently holding off on accepting the offer as it seeks to secure the most favorable deal. Co-founder and adviser Tan Sri Tony Fernandes shared this update during a virtual media briefing.

According to BERNAMA News Agency, Fernandes highlighted that the term sheet, which guarantees the funding of US$1 billion, has already been signed. However, AirAsia is exploring various options to ensure it gets the best possible terms. The funding date has been confirmed, and the majority of the due diligence has been completed, with only a few checks remaining. The decision now hinges on whether the airline can negotiate a better deal elsewhere.

AirAsia is considering the completion of this financing exercise by December 2026 or January 2027, with interest expressed by multiple funding sources. Fernandes noted the involvement of banks from Europe, the United States, and local banks, with a preference for local banks due to their favorable terms. The financing interest also extends to bond investors and Middle East investors, with a positive response reported.

The proposed US$1 billion financing aims to refinance expensive borrowings and settle creditor obligations. Fernandes dismissed a foreign news wire report suggesting that AirAsia needs at least US$3 billion in fresh capital, calling the figure baseless and emphasizing that the US$1 billion target is focused on reducing interest costs and enhancing cash flow.

Fernandes expressed a preference for local bank financing to reduce foreign-exchange exposure by aligning borrowings with the company's revenue currencies. He pointed out that while loans are in US dollars, earnings are primarily in baht, ringgit, and rupiah, making local bank financing a more cost-effective and less risky option.