AIRASIA GROUP 
JAKARTA/KUALA LUMPUR (Reuters) - Shares in AirAsia Bhd (>> AirAsia Berhad) recovered from five-year-lows after the Indonesian government on Thursday eased investors' fears that the Malaysian budget carrier's local affiliate could be grounded for a lack of funds.
Days after several Indonesian officials named the airline as one of 13 carriers that must repair stretched balance sheets by July 31 or face shutdown, the transport ministry softened its tone, saying it would "help and support" the companies instead.
The ministry's statement on Thursday did not mention anything about a shutdown, and a spokesman told Reuters this matter would be decided "in the future".
Shares in AirAsia, which took a beating in recent weeks after a Hong Kong-based research firm questioned its accounting, rose as much as 2.3 percent on Thursday after plunging more than 15 percent in the previous session on worries about the fate of its 49 percent-owned Indonesian affiliate.
The stock closed up 0.8 percent, outperforming the broader market, helped by Indonesia AirAsia's announcement that it was drafting a plan aimed at improving shareholder equity.
"There are tough economic times but we are not here (in Indonesia) for the short term," AirAsia Group CEO Tony Fernandes told Reuters in Singapore when asked about the loss-making but key market for the carrier.
Investors often cite regulatory uncertainty as a key obstacle to doing business in Southeast Asia's biggest economy.
The requirement for the airlines to boost their finances is part of a government drive to improve Indonesia's aviation safety credentials. Last week's crash of a military plane, which killed more than 140 people, came after an Indonesia AirAsia jet also crashed in December, killing all 162 people onboard.
Analysts, however, the measures had been imposed without warning on an industry already struggling with over-capacity and cut-throat competition.
"There are thousands of jobs on the line because of this directive," said Maybank Kim Eng analyst Mohshin Aziz, who described the ministry's Thursday statement as "more sensible".
For AirAsia, the uncertainty over its Indonesia affiliate comes amid concerns about its accounting practices. Its shares have fallen by nearly 40 percent since GMT Research last month said the airline uses transactions with loss-making carriers to boost its earnings. The company has denied any wrongdoing.
(Additional reporting by Siva Govindasamy in SINGAPORE; Editing by Miral Fahmy)
By Eveline Danubrata and Al-Zaquan Amer Hamzah
