AirAsia reports RM800mil loss, 15% revenue drop due to Covid-19

AirAsia group suffered its worst crisis since it began, says Tony Fernandes. (Reuters pic)

PETALING JAYA: AirAsia Group Berhad has reported a net loss of RM803.85 million in its first quarter results, compared to a net profit of RM96.09 million in the first quarter of 2019.

First-quarter revenue fell by 15% from RM2.73 billion to RM2.31 billion, the airline said in a filing with the stock market.

It said despite the significant challenges in the airline industry, the group reported a breakeven earnings before interest, taxes, depreciation and amortisation (RM29,000) due to proactive capacity and cost management, coupled with a strong performance from the non-airline businesses.

The group’s loss was mainly due to RM270.1 million of fair value losses on derivatives, loss on settlement of fuel hedges of RM110 million and RM243 million additional depreciation and lease liabilities interest on operating lease aircraft.

AirAsia group chief executive Tony Fernandes said the Covid-19 pandemic was the airline’s toughest challenge since it began operations in 2001.

Despite a strong start to the year, the uncertainty of the coronavirus outbreak, followed by travel restrictions and border controls, led to weaker air travel demand in February and March.

He said the group had been restructured to make it a leaner and tighter ship, and cash expenses had been cut by half this year.

On the airline operations, he said they are encouraged by the strong rebound demand seen since resuming operations in late April 2020 and foresees this to continue in the coming months.

“Our innovative product, the AirAsia Unlimited Pass, sold out quickly. Competition is pricing rationally. This bodes well for us to compete in the post-Covid-19 world.”

Further measures in managing and containing cost include both the management and senior employees of AirAsia Group volunteering a salary sacrifice, re-negotiating contracts and deferring all non-essential expenditures, he said.

In the first quarter which ended on March 31, AirAsia’s ancillary revenue decreased by 16% year-on-year to RM556 million, dragged by airline ancillary which saw decline of 28% mainly due to removal of processing fees and 22% fewer passengers carried.

Non-airline ancillary revenue grew 27% year-on-year.

The group’s country units AirAsia Philippines had growth of 4% to 22% while AirAsia Indonesia and AirAsia India gained market share each to 4% and 8%.

The airlines have restarted operations in phases and are focusing domestically for now, before opening up to Asean and the rest of Asia when border restrictions are lifted. The airline is operating 191 daily flights across the region.

As for safety against Covid-19, the airline has recently implemented end-to-end contactless procedures including contactless payments at the airport, contactless kiosks, and enhanced features on its mobile app.The group financial technology arm had reported a 161% growth in revenue with expansion in India, Bangladesh, Nepal and Australia.

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