AirAsia posts loss as it focuses on domestic networks

Aviation Updates Philippines – While setting its focus to resume flights through its domestic networks, the AirAsia Group reported a net loss of around RM 1.2 billion during the second quarter of the year.

 

Image: AirAsia A320 stock image (Source: AirAsia)

 

In a release from the airline, the reported net loss is a sharp contrast to the net profit the budget airline group reported during the same period (April-June) of the previous year – RM 47 million. AirAsia cited the decline in travel demand which resulted in a 96% decline in revenue during the second quarter of the year compared to the year prior.

 

AirAsia reported its second quarter revenue at RM 119 million compared to RM 2.9 billion in 2019.

 

Along with the decline in travel demand, the airline group also reported its realised hedging losses at RM 199 million and the RM 60 million cost to provide refunds for travelers.

 

The Malaysian-based budget carrier group was heavily affected by the lockdowns and travel restrictions throughout Southeast Asia starting mid/late March. Domestic operations in key markets such as Malaysia, Thailand, Indonesia, and the Philippines would gradually resume within the next few months.

 

Regarding the next moves the group will take, AirAsia Group Berhad President Bo Lingam stated it would focus on building back up its domestic networks to boost travel opportunities where AirAsia has subsidiaries at.

 

“Reviving domestic travel is high on our priority list as an opportunity to strengthen our domestic position in all of our key operating markets. Demand is expected to build up in 3Q2020 and 4Q2020, supported by both business and leisure travel. With lockdowns being lifted, consumers are keen to explore vacation spots in their own respective countries,” said Lingam.

 

For international flights, Lingam added: “Internationally, last week we reinstated the popular Kuala Lumpur-Singapore route for essential travellers under the Reciprocal Green Lane scheme. This is a step in the right direction and we are optimistic about the further formation of travel bubbles and green lanes between countries with strong and proven disease containment strategies and low infection rates or active cases. Reviving the air travel industry is a collective effort, and AirAsia has been playing an active role by continuously engaging key stakeholders.”

 

AirAsia X to Remain Grounded

 

While AirAsia Group subsidiaries plan to ramp up domestic flights, the group's long-haul AirAsia X carriers in Malaysia and Thailand continue to stay grounded with the exception of cargo and repatriation flights.

 

In a separate statement, the AirAsia X reported a loss of around RM 129.2 million for the second quarter of 2020, while its net loss stood at RM 305.2 million.

 

It's Thai based subsidiary Thai AirAsia X reported a quarterly loss of USD $54.2 million.

 

Because the AirAsia X route network primarily focuses on international flights, the airline expects to remain grounded saying in a statement: “AirAsia X as a Group is expected to remain in hibernation mode in the near term. The prospect of resuming scheduled flights is intrinsically linked to the easing of travel restrictions and lifting of border controls as well as the trajectory of the recovery in demand for international air travel.”

 

To mitigate the situation, AirAsia X stated it is in talks with business partners to reschedule payments, reduce costs, and renegotiate contracts to save up cash for when it can resume operations.