341 / 396
31. Borrowings (cont’d.)
The fair values of the floating rate borrowings approximate their carrying amounts, as the impact of discounting is not significant.
The fair values of the fixed rate borrowings are based on cash flows discounted using borrowing rates that are reflective of the
Group’s and Company’s credit risk at the balance sheet date, at 3.4% to 4.7% (2016: 2.6% to 4.3%) per annum. The fair values of fixed
rate borrowings are within level 2 of the fair value hierarchy.
The term loans, finance lease liabilities (Ijarah) and CommodityMurabahah Finance are for the purchase of aircraft, spare engines and
working capital purposes. The repayment terms of secured term loans, finance lease liabilities (Ijarah) and Commodity Murabahah
Finance are on a quarterly or semi-annually basis.
Total borrowings include secured liabilities of the Group and Company of RM8.9 billion and RM6.4 billion respectively (2016: RM10.0
billion and RM7.3 billion). These are secured by the following:
(a) Assignment of rights under contract with Airbus over each aircraft;
(b) Assignment of insurance and reinsurance of each aircraft; and
(c) Assignment of airframe and engine warranties of each aircraft.
32. Provision for retirement benefits
The Group has unfunded, non-contributory and actuarially computed retirement benefit plans which provide retirement benefits to
employees who reach the mandatory retirement age under the provisions of Labor Law in Indonesia and the Philippines.
The amounts recognised in the statements of financial position as at 31 December are as follows:
Group
2017
RM’000
2016
RM’000
Present value of defined benefit obligation
72,207
–
The movements in the present value of defined benefit obligation for the year ended 31 December are as follows:
Group
2017
RM’000
Defined benefit obligation at 1 January
–
Deemed acquisition of subsidiaries (Note 12)
68,514
Current service cost
8,392
Interest cost
4,161
Benefits paid
(3,122)
Remeasurement loss
1,399
Exchange differences
(7,137)
Defined benefit obligation at 31 December
72,207
[ ]
327
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS