Turbulent Times For AirAsia

Credit: The Star.

The economy is not doing so good right now. Anyone can tell you that much. However, the airline industry is doing exceptionally worse than everyone else. This is because almost nobody can travel anywhere out of Malaysia; travel bans in many countries make travel of any sort including tourist and corporate impossible. Even in countries without travel bans, the threat of contagion looms large, lowering demand for travel domestically as well as internationally. 

The AirAsia Group is one of the companies hit hardest by this. In fact, the company has just posted a record quarterly net loss of RM803.85 million in the first quarter of 2020, its biggest first-quarter loss since its listing in November 2004. 

On top of that, shares in the AirAsia Group were halted on Wednesday (July 8) after the company’s auditor said there were material uncertainties that cast doubt on the budget carrier’s ability to continue operation. 

To make things worse, the budget airline’s Board of Directors filed into Bursa Malaysia today, saying the company had triggered criteria under the Practice Note(PN) 17. This officially means Air Asia is in financial distress and basically, deep shit. There is gonna be a lot of restructuring and efforts to revive for the company to survive this downturn.  

The good news for AirAsia is that the government’s regulation allows companies that fall under the criteria of the PN 17 to not be listed as in financial distress for a period of 12 months from the announcement. Till they, you know, get it together. 

Already, Air Asia has said it is looking for proposals to raise capital to strengthen its equity base and liquidity. There are reportedly joint ventures and collaborations that will hopefully provide a much needed injection of liquidity and investment into the flailing company. 

“Since the resumption of our flights post – hibernation mode, we are witnessing encouraging demand for domestic travel,” Riad Asmat, the chief executive officer of AirAsia told newswire, Bernama. 

The company has endeavoured to restart demand as evidenced by the new offering of Unlimited Flights pass for a charge of rm499. The pass applies to most flights, excluding to Bali, Singapore, Jeddah and all Fly-thru routes. 

Trading of AirAsia’s shares has resumed with effect from 2.30 pm, today. Accordingly, trading in the structured warrants relating to AirAsia had resumed at the same time.



Share this post:

Leave a Reply

Your email address will not be published. Required fields are marked *