AirAsia Group announced that it will tap the help of lenders to figuratively stay in the air as doubts continue to mount on the budget carrier's capacity to survive after the global health crisis dealt a heavy blow to its business.
AirAsia on Tuesday reported a record net decline of $238 million for the second quarter ended June 30, compared with a net profit of $4.15 million in the same quarter of 2019, based on an exchange document from Bursa Malaysia. The company's revenues plummeted 96 percent to just $28 million.
Ernst & Young, the long-haul airline's auditor, issued a warning on the company's financial capabilities. The auditor notified the Malaysian bourse of a "significant doubt" over AirAsia's ability to continue operating in regard to its current financial status.
AirAsia CEO Tony Fernandes has engaged in discussions about the possibility of joint ventures in hopes of infusing fresh capital into the cash-strapped carrier. The group is currently evaluating options for further lender support in addition to capital-raising plans.
The company's expenditures fell as it was forced to park most of its planes at the end of the first quarter and only slowly restarted flights in May to the first weeks of June as local travel lockdowns were lifted.
AirAsia has imposed cost-cutting measures and pay reductions for management, cabin and ground personnel and even directors. It has also conducted negotiations on deferred payments to suppliers and business partners, and has reorganized its fuel hedging status, the company divulged.
In the Malaysian stock exchange filing, Southeast Asia's second-largest low-cost airline in terms of market value said they were working with top lenders for a state loan pledge under the Danajamin Prihatin Guarantee program in the country, while its operations in Indonesia and the Philippines currently work with banks for a financial support.
AirAsia said it expects to have substantial liquidity in the second half of next year, as sales should normalize with increasing local air demand.
