Malaysia’s storied AirAsia, founded by Tony Fernandes, appears to be in deep trouble after the company’s auditors filed a report with the stock exchange in Kuala Lumpur saying the airline may not survive as a “going concern” due to the near total shutdown of international aviation as the COVID-19 pandemic continues to surge around the globe.
The airline group’s shares fell 11 percent after trading resumed on Wednesday (8 July) afternoon. In an audit opinion on the airline’s earnings results for 2019 issued Tuesday, Ernst & Young said the financial statements were prepared on a going concern basis – which is dependent upon a recovery from the COVID-19 pandemic and the success of fundraising efforts. AirAsia on Monday posted an RM803.3 million (US$188 million) loss for the three months ending 31 Mar, its biggest first-quarter loss since its listing in November 2004. The company said in June it was trying to raise funds to cope with the crisis.
The COVID-19 pandemic has shut the borders of most of AirAsia’s key markets, including Malaysia, Thailand, Indonesia, the Philippines, China and India. As a result, the budget airline carried 9.85 million passengers in the first quarter, 22 percent of the year-earlier total. Ernst & Young said AirAsia has seen positive developments lately with passenger seat bookings, flight frequencies and load factors gradually improving.
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