Tony Fernandes, the founder and CEO of AirAsia Group, says his firm will recapitalize its Indonesia AirAsia (QZ, Jakarta Soekarno-Hatta) subsidiary ahead of a July 31 deadline to improve its overall financial standing.

The Indonesian Ministry of Transport (MOT) earlier this month gave thirteen local carriers - Indonesia AirAsia, Batik Air (part of the Lion Group), Cardigair, Transwisata Air, EastIndo, Survai Udara Penas, Air Pacific (Indonesia), Jhonlin Air Transport, Asialink Cargo Express, Ersa Eastern Aviation, Tri-M.G. Intra Asia Airlines, Nusantara Buena Air, and Manunggal Air - until the end of the month to exit negative equity (their loans are greater than the value of their assets) or risk losing their operator's licences.

According to Reuters, Fernandes told a company event in Kuala Lumpur that its Indonesian unit had submitted a plan to boost shareholders' equity ahead of the deadline.

"We've always said that we're re-capitalizing the airline and we will. There's not a second of worry that Indonesia AirAsia will close down because of equity regulations," he said.

Malaysian brokerage firm TA Securities said earlier this month that PT Indonesia AirAsia, a 49/51 joint-venture between AirAsia Group and Indonesian firm PT Fersindo Nusaperkasa, needs at least IDR3.035 trillion (USD227.77 million) to bring its finances up to par with Indonesia's Law No.1/2009 which governs airline financial requirements.

Lion Air (JT, Jakarta Soekarno-Hatta) Director for General Affairs, Edward Manurung, and Cardig Air CEO Boyke P. Soebroto have stated their airlines will take action to meet financial minima.

Despite the initial hard line, Jakarta has now softened it stance to say its saying it would “help and support” airlines to improve their finances.