AirAsia Group Bhd plunged into the red with a net loss of RM992.89 mil in its second quarter ended June 30 from RM17.34 mil a year ago on the back of lower revenue of RM118.96 mil versus RM2.92 bil.
The low cost carrier had to bear the brunt of the Covid-19 pandemic with massive declines in airline revenue, as capacity was significantly reduced due to fleet hibernation at the end of March. Gradual resumption of domestic operations started from the end of April as travel restrictions eased.
“The airline revenue in the quarter was also negatively impacted by RM60 mil in refunds. Less impacted in the quarter [was] non-airline revenue [which] declined 55% y-o-y,” AirAsia said in a statement.
The group’s cargo and logistics operations, Teleport, meanwhile, saw its share of group revenue rise to an all-time high of 42%, as it transported medical aid and critical supplies during the quarter.
In the six months just ended, AirAsia recorded a net loss of RM1.8 bil versus a net profit of RM111.78 mil a year ago while revenue declined 57% to RM2.43 bil from RM5.65 bil.
The group’s president of its airlines unit Bo Lingam said the group had managed to stabilise the airline business in 2QFY20.
“We will be able to maintain sustainable operations on the back of our domestic services for the rest of the year, if travel restrictions and border closures remain in place. Fares have been improving and we believe that competitors will continue to price rationally,” he said.
AirAsia CEO Tan Sri Tony Fernandes said during the lockdown, the group took the opportunity to restructure its operations and lay the foundations for a sustainable and viable business for the future.
“Although we do not foresee capacity returning to pre-Covid-19 levels in the short term, we expect demand to gradually continue to grow throughout the second half of 2020 and for the airline to be profitable in the years to come, as costs have reduced significantly amidst our network optimisation and improved pricing strategies,” he added.
He also said fuel hedging has been restructured for the airline, while operating costs have reduced and that the group has received support from lessors for deferrals.
“Our cash flow is managed tightly and we are well prepared to rely on operating domestic sectors in the short term, if international travel restrictions continue. Aside from the major cost-cutting exercise we have embarked on across the group, we are also securing commitments from the banks for the Danajamin Prihatin Guarantee Scheme in Malaysia and other bank financing in other markets. We are also actively exploring capital raising opportunities in each of our key operating markets, which should aid in sustaining our cash flow levels,” Fernandes added.