a. What is leverage? Explain the different types of leverage? (10 marks)

b. From the article, the Chief Executive Officer (CEO) of AirAsia Group Berhad is trying to cope with what type of leverage? Please discuss THREE (3) points to support your argument. (15 marks)

KUALA LUMPUR (Oct 8): Malaysia's AirAsia Group Bhd is looking to slash doz- ens of planes from its fleet by returning air- craft to lessors, Group Chief Executive Tony Fernandes said on Thursday. "We are not going to buy new planes and we are going to return as many as we can. I estimate by the end of next year we'll be flying 180 planes," Fernandes told report- ers. The group currently has 245 aircraft. He said the group is already looking at This week it shut its Japan operations and based on your data, Fernandes said, de- returning 22 planes from this year. its long-haul arm AirAsia X Bhd announced clining to elaborate. Fernandes said AirAsia remains in talks plans to restructure US$15.3 billion of debt. The group has long talked about lever- with planemaker Airbus about reducing AirAsia is also looking to raise around aging its large user data base to expand its pending orders. US$600 million in capital this year, and has business. "I don't see us getting into a position considered fundraising to fund expansion AirAsia Digital, its newly rebranded dig- where we want to buy planes for a number of its digital arm. ital arm, houses businesses such as travel of years. And even if we want to buy planes, Fernandes said the group has recently and lifestyle platform airasia.com which it there will probably be a lot of cheap second- been approached by a US firm offering to launched on Thursday. hand planes," Fernandes said. lend that business up to US$1 billion. Its other businesses include fintech unit The budget carrier, like other airlines, I've been saying our data is very valu- BigPay, logistics unit Teleport, fast food busi- has been hit hard by travel restrictions due able. An American firm has come forward ness Santan and agriculture e-commerce to the pandemic. and said, you know, we would lend to you platform OurFarm