Malaysia’s AirAsia Group, headed by flamboyant founder and CEO Tony Fernandes, said Thursday (9 July) that despite the company’s auditors warning the low-cost carrier may not survive the COVID-19 pandemic, the board of directors are “confident of the successful continuation of the business”.

Fernandes, who has spent the past couple of years trying to turn AirAsia into “consumer brand” spanning technology as well as restaurants, said in recent weeks travel is “gradually” resuming in some countries and said the “formation and discussion of ‘travel bubbles’ and ‘green lanes’ with key economic partners with a low infection rate and proven pandemic curbing systems, is a step in the right direction.
“As domestic travel is now allowed in Malaysia, Thailand, Indonesia, India and the Philippines, we have been resuming our flights on a staggered yet steady basis since late May,” Fernandes said. “In support of governments’ efforts to revive domestic tourism and ultimately stimulate economic recovery, AirAsia has aggressively launched large-scale promotions and sales campaigns. I am encouraged by the higher-than-anticipated sales this has generated. On 7 July, we registered our highest post-hibernation sale with 75,000 seats sold in a single day, reflecting pent-up demand and signalling green shoots of recovery. We also sold over 200,000 AirAsia Unlimited Passes since its recent launch for domestic Malaysia, domestic Thailand and AirAsia X.”
Fernandes said the group-wide load factor was 60 percent with AirAsia Malaysia’s load factor reaching 65 percent and he expects to achieve a higher load factor of 70 percent soon. Fernandes added that AirAsia’s Teleport logistics arm grew 49 percent year-on-year in the first quarter of 2020.
Fernandes also said the company was on the hunt for cash to beef up its balance sheet. “We understand the importance of shoring up our liquidity to ensure sufficient cash flow. We have been presented with proposals in various forms of capital raising, be it debt or equity, and are in ongoing discussions with numerous parties, including investment banks, lenders, as well as interested investors in seeking a favourable outcome for the group,” Fernandes said. “We have received indications from certain financial institutions to support our request for funding, amounting to more than US$234 million. Of this debt funding, a certain portion would be eligible for the government guarantee loan under the Danajamin PRIHATIN Guarantee Scheme in Malaysia. Other than Malaysia, our Philippine and Indonesia entities are currently in various stages of bank loan applications. In the Philippines, we have applied for the government guaranteed loan under the Philippine Economic Stimulus Act (PESA), with an expected positive outcome.”
Fernandes said the company will also save cash by laying off staff and cutting salaries by 15-75 percent. “We have received deferrals from our supportive lessors and are now working on further extensions. We have also restructured 70 percent of our fuel hedging contracts and are continuously negotiating with our supportive counterparties for the remaining exposure,” Fernandes said.