AirAsia Group Berhad’s results for the quarter ended 31 March 2020 (“1Q2020”), show a loss of RM953 million, as compared to RM102 million in profit in the previous corresponding quarter. The group revenue for the quarter also slipped by 15%, displaying the impact of Covid-19 on air travel and the company.
“The loss was attributed to a shortfall in revenue amidst impacted travel demand, higher maintenance and overhaul costs by 54% due to the accounting impact from the change in aircraft ownership (MFRS137) , loss on settlement from fuel hedging amounting to RM110 million and fair value loss on derivatives of RM270 million,” the airline said in a statement.
“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,” said AirAsia Group Berhad CEO, Tony Fernandes.
Air Asia Group has sought payment deferrals from its suppliers and lenders and has also restructured a major portion of its fuel hedges. This will help deal with the excess of hedged volume against expected fuel consumption post-Covid-19 and reduce the hedging losses if fuel price remains at today’s prices.
“We are positive over AirAsia.com’s 1Q2020 revenue which was up 118%. As flights are resumed, we are rolling out new offers and promotions in stages to further stimulate demand, focusing on domestic at this point. We received overwhelming response for our recent innovative product, AirAsia Unlimited Pass for AirAsia X, domestic Malaysia and domestic Thailand. We will be rolling this out in other markets soon,” said AirAsia.com CEO Karen Chan.
“We continue to play our part to revive the domestic tourism industry by partnering directly with local hotels to offer hassle-free, best price guaranteed deals with bigger savings on SNAP, our flight + hotel combo booking platform which was just launched in June. We remain true to our mantra – enabling everyone to fly through our great value fares. AirAsia is all about value, choice and innovation and this is just the beginning of our recovery efforts.
Malaysia remains Air Asia’s strongest domestic market at 61% market share. “Since beginning domestic operations in late April, we are encouraged by the increase in load factors week by week. Competition has also remained rational. We are aiming to increase our flight frequencies to around 50% of our pre-Covid operations and we look forward to resuming all domestic routes in the coming weeks and months to cater to the increasing demand. Currently, we are operating 365 daily flights across the region,’ President (Airlines) of AirAsia Group Berhad Bo Lingam said:
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