AirAsia shares plunge after Airbus bribery allegations
FMT Reporters
-February 3, 2020 10:41 AM
AirAsia has denied bribery allegations linked to the budget airline following a settlement reached between Airbus and authorities in Europe and the US.KUALA LUMPUR: Shares of AirAsia Group and AirAsia X took a plunge today after allegations that plane maker Airbus had paid a bribe of US$50 million (RM204 million) to secure orders from the budget airline.
As at 10am, AirAsia Group lost 13 sen or 9.09% lower at RM1.30 with 20.95 million shares changed hands, while AirAsia X dipped 1 sen or 7.69% to 12 sen with 18.11 million shares transacted.
The airline has rejected allegations of wrongdoing, after reports cited legal documents showing Airbus paid US$50 million and offered US$55 million (RM225 million) more, to sponsor a sports team linked to two unnamed “key decision-makers” at AirAsia and AirAsia X.
The documents are part of a multi-billion dollar settlement reached with anti-graft authorities in Britain, France and the US, after the European plane maker admitted to bribery across its international business.
Britain’s The Telegraph had also cited an angry email from one AirAsia executives to a senior Airbus official.
“You owe me four million already and I’m owed 16 million in total. This should have been paid ages ago when I bought the first 60 aircraft. I want my money,” the paper quoted the email, which was part of the legal documents.
Following this, the Malaysian Anti-Corruption Commission said it was in touch with authorities in the UK over the allegations and was investigating the matter.
AirAsia has said it will fully cooperate with the anti-graft body.
It also said its correspondence with Airbus dating back more than a decade was reported in the press “without proper context or review”.
“And we are concerned that views and opinions on the matter may have been formed unfairly and prematurely.”
Meanwhile Reuters reported that TA Securities downgraded AirAsia Group stock to “sell” from “buy”.
“We choose the ‘sell first, ask questions later’ approach to avoid the uncertainty in association with the corruption investigation by MACC, where the impact on AirAsia could be significant in terms of corporate governance,” it was quoted as saying.
Analysts were also quoted as saying that the timing of the accusation, as airlines struggle with air travel disruption in the wake of the coronavirus epidemic, is bad news for AirAsia.
“Besides being embroiled in this corruption scandal, we expect a tough operating environment to persist over the medium term with maintenance cost remaining high … and concerns over the Wuhan virus outbreak which could derail propensity for air travel in the region,” Kenanga Investment Bank wrote in a research note, as reported by Reuters.
