The Malaysian-based budget airline, AirAsia, is facing a struggle to stay afloat as the airline industry continues to see substantial impacts caused by the coronavirus outbreak.
AirAsia, which ranks as one of the most popular budget airlines in Southeast Asia, recorded quarterly losses of 803 million ringgit (USD187 million; 5.8 billion Thai baht) during the first three months of this year.
Auditor of the airline, Ernst & Young, reported:
“Travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel which impacted the group’s financial performance and cash flows.”
They continued by expressing concern in an audit statement to the Kuala Lumpur stock exchange:
“(The) existence of material uncertainties that may cast significant doubt on the group’s and the company’s ability to continue as a going concern.”
On Wednesday, trading for AirAsia shares was temporarily stopped in the morning before resuming in the afternoon.
After resumption, shares in AirAsia Group Bhd plummeted by 18 percent before slightly recovering to a loss of 12 percent by the late afternoon.
The airline is currently considering all avenues to keep afloat, including collaborations and joint-ventures with other struggling budget airlines in the region.
In Thailand, Thai AirAsia recently launched a promotion for an “unlimited ticket” that customers could purchase for 2,999 baht and use as many times as desired for domestic flights in the country until the middle of December.
In an exchange filing on Wednesday, AirAsia said that the audit statement released by Ernst & Young, in combination with a decline in shareholder equity, had triggered the criteria for a Practise Note 17 (PN17).
The PN17 applies to companies in financial distress. However, due to the Malaysian exchange suspending applications until June next year as part of relief measures, the airline won’t be classified as PN17 at the moment.
Aviation analyst at UOB Kay Hian Pte in Singapore, K. Ajith, estimates that AirAsia requires 2 billion ringgit (USD467.8 million; 14.6 billion Thai baht) this year to stay afloat. He said:
“There’s not a lot of options, and the best one could be the government stepping in but seeking a rights offering by the company in exchange.”
Source: Bangkok Post