Fernandes: Uncertain time for AirAsia

Aviation Updates Philippines – As global airlines continue to hemorrhage cash balances amid the COVID-19 pandemic, AirAsia Group Chief Executive Officer Tony Fernandes said it currently faces an 'uncertain time' — possibly the biggest challenge yet for the low-cost airline.

"It’s an uncertain time. Never could I have imagined it, no one could have predicted it and yet everyone has been touched by it. So I want to be open and transparent with you in this time of uncertainty," Fernandes told its customers via e-mail.

A report from Malaysia's The Star revealed that the AirAsia Group requires an urgent intervention in dealing with its worsening financial situation. Although the airline still has the cash to spend, it is quickly draining out due to its on-going financial commitments.

AirAsia, as of end-2019, has a cash balance of around RM2.6 billion. However, financial service provider CGS-CIMB Research says the low-cost airline could disburse up to RM527 million in a month. Negotiations for a loan to keep the airline afloat continues.

Fernandes said AirAsia has grounded 96 percent of the group-wide fleet. The group's units in Malaysia, Philippines, Indonesia, India, and Japan have halted all domestic and international flights throughout April and May. Thai AirAsia currently operates domestic services on a significantly reduced scale.

He added: "We are doing everything possible to reduce costs during this time so we can come back fighting as fast as possible and continue to be the world’s best low-cost carrier, enabling everyone the ability to fly with our great value and service."

In a separate interview, Fernandes told Forbes that he is 'appealing' for passengers to avail of the credit voucher option instead of refunds. That way, airlines will be able to retain some cash for its future expenditures. He stressed almost 80 percent of the passengers accepted the voucher offers.

To preserve cash, AirAsia's Allstars, a collective name for all of its employees, has agreed to take salary cuts ranging from 10 to 75 percent. Fernandes and AirAsia Chairman Kamarudin Meranun says they "will not be taking a salary during this period..."

He went on to say: "I thank them for their sacrifice and in keeping the big picture in mind as we navigate this together."

"We’ve never had a time like this before and we are doing our best. We are not always perfect but we strive to do all we can for our people and our customers at all times. This is unprecedented but it is also temporary and we will be back, stronger than before, repainting the skies red and making sure everyone can fly again."

The AirAsia Group has placed itself as the leading and the largest airline in the ASEAN region. The group flies to more than 165 destinations spanning 25 countries, according to a 2016 Routesonline report.