The Malaysian government is willing to guarantee 80% of an MYR1 billion ringgit (USD240 million) loan provided to AirAsia Group by a consortium of Malaysian banks, Nikkei Asia has reported, citing internal sources.

The loan would be provided under the framework of the COVID relief fund, the Danajamin Prihatin Guarantee Scheme (DPGS), which has a total budgeted value of MYR50 billion (USD12 billion). Disbursements are expected in November 2020, according to sources, and would be used to repay AirAsia Group's short-term liabilities and support its working capital.

The low-cost carrier group has yet to confirm the news in a stock market filing formally. The Malaysian government has also not issued a statement yet.

AirAsia Group Chief Executive Tony Fernandes has repetitively said that while the holding was not expecting a state bailout, it would hope to be treated on par with state-owned Malaysia Airlines (MH, Kuala Lumpur Int'l) when it comes to the state's assistance. The group is evaluating raising capital on the markets as well.