AirAsia Group incurs P11 billion net loss in Q1

Aviation Updates Philippines – Although the AirAsia Group Berhad started the year 2020 strong, the COVID-19 pandemic’s standstill offset the first-quarter rise with a huge RM953 million net loss, roughly equivalent to P11.02 billion.

According to AirAsia, the sharp financial downturn was attributed to the unanticipated loss of travel appetite and other operational expenses such as aircraft maintenance and overhaul and loss of settlement on fuel hedging.

Amid the tightening travel restrictions back in the first quarter, the low-cost airline maintained a positive group-wide load factor of 80 percent, slightly higher than the 77 percent estimate. AirAsia Malaysia, Indonesia, and the Philippines reported an average of 78 percent.

“This was achieved through proactive capacity management, particularly in the months of February and March, with the cuts most notable in AirAsia Malaysia and AirAsia Thailand,” its report said. AirAsia’s route network was widely cut due to the closure of borders in most Southeast Asian countries.

AirAsia Group Berhad’s 2020 revenue slightly dropped to RM2.16 billion compared to RM2.63 billion in 2019, down by 15 percent. Ancillary revenue also decreased by 16 percent to RM556 million; this was dragged by the significant reduction of airline ancillary and passengers carried.

For the first quarter, AirAsia Philippines flew 1.8 million passengers, nine percent down from 1.97 million passengers last year. The load factor greatly decreased from 91 percent in 2019 to only about 84 percent during the same period this year.

AirAsia said its Philippine unit performed the best in domestic market dominance as it grew by four points to 22 percent. The Indonesian and Indian units, moreover, each gained market dominance by two points.

The low-cost carrier remains positive on its future outlook. AirAsia Group Berhad President Bo Lingam emphasized the company has been proactively restarting flights to key destinations after governments have eased flight restrictions in Southeast Asia.

“For each of our operating markets, we have restarted operations in phases and are focusing domestically for now, before opening up to Asean and then the rest of Asia when border restrictions are lifted. We continuously engage with stakeholders especially local governments and airports, among others, on collective efforts in reviving air travel.”

The chief said that the company has been “encouraged” with the steady increase in load factors every week. AirAsia has been aiming to return to at least 50 percent of the pre-COVID route network while looking forward to the resumption of all domestic routes shortly.

“Currently, we are operating 365 daily flights across the region. We look forward to the reopening of international borders in recognition of the fact that air transport provides the connectivity that is essential for the resumption of economic activities,” Mr. Bo Lingam added.

Meanwhile, AirAsia Group Berhad Chief Executive Officer Tan Sri Tony Fernandes continues to believe in the airline to strongly remain as the “leading low-cost carrier in the region.”

Fernandes said: “This is by far the toughest challenge we have faced since we began in 2001. Every crisis is an obstacle to overcome, and we have restructured the group into a leaner and tighter ship. We are positive in the strides we have made in bringing cash expenses down by at least 50% this year, and this will make us even stronger as the leading low-cost carrier in the region.”

Editor's Note: AirAsia Group Berhad refers to the consolidated AOCs of AirAsia Malaysia, AirAsia Indonesia, and AirAsia Philippines for financial reporting purposes.

Photo from thunisfly, AirAsia Instagram page