AirAsia's money-losing Indonesian unit is facing fresh headwinds after the country's transportation ministry took the unusual step of ordering the airline to raise as much as $225 million of funding quickly.
"It's a black swan event," said Mohshin Aziz, an airline analyst at Maybank-Kim Eng. "No country in the world has ever done this."
Indonesia's transportation ministry has ordered 13 airlines to raise funds to reach positive equity positions out of a concern that negative equity will affect safety oversight, according to media reports. Of the 13, only AirAsia is publicly listed, and in a filing to Bursa Malaysia, Malaysia's stock exchange, the company confirmed Tuesday that its 49-percent-owned Indonesian associate received a letter requiring it to reach the positive equity position by July 31.
That would likely mean raising more than 3 trillion rupiah ($224.8 million) by the deadline. AirAsia's shares dropped as much as 15.4 percent in intraday trade in Malaysia Wednesday, tapping its lowest levels since 2010, during the European debt crisis.
"There's no chance anybody can meet that deadline," Aziz said. "It's a festive month. Muslims are just about to go for holiday next week. You can't get any deals done this month, let alone find 3 trillion rupiah to comply with the regulation."
Phone calls to Indonesia's transportation ministry went unanswered and emailed requests for comment weren't immediately returned.
But if the directive is enforced, the risks for the carrier are high.