Question

what is the current financial situation (2020 ) of air asia? and how do they manage their financial?

500 words.

Answer 1

Air Asia has been in the news for having recorded losses. Due to the recent pandemic and widespread lockdown, Air Asia like any other airline has been grounded. AirAsia Malaysia had temporarily suspended all international and domestic flights until April 25, while AirAsia Philippines until April 14. AirAsia Indonesia is also expected to see a sharp reduction in frequency in its international flights.

AirAsia losses could widen this year, owing to lower load factors and yields exacerbated by travel restriction following the Covid-19 pandemic that caused air travel to collapse.

According to Kenanga Research, basis the AirAsia’s financial year ending December 31, 2020 (FY20) earnings, it is expected to make a wider net loss of RM527 million from RM258 million net loss previously.

-------------------------------------------------------------------------------------------------------------------------------------------------------

It shall be noted that Air Asia had net cash of RM2.2 billion as at December 31 last year. However, given there are downside risks, it is managing its financials by cutting on costs. It is talking to the government in terms of mechanism on the recently-announced rebates on rental for premises at the airport as well as landing and parking charges.

As per the Air Asia Group presentation in Mar 2020, it is going for an aggressive marketing push, replacing canceled international flights with more domestic and intra-ASEAN flights. It is stringently controlling costs internally. It has frozen hiring for the airline business. It is not extending expiring leased aircraft. It is discussing with lessors on lease reductions. It is negotiating lower fees with maintenance service providers.