AirAsia Group is foreseeing a V-shaped rebound in air travel for the near future, as demand for air travel picks up and global travel restrictions continue to ease, with the low-cost carrier group expressing hope that initiatives such as the upcoming vaccinated travel lane between Malaysia and Singapore, where fully vaccinated travellers can enter either country without a quarantine, be replicated elsewhere.
Having seen “recent positive developments” in markets such as Indonesia, Malaysia, the Philippines, and Thailand, the group expects strong bookings for spontaneous travel due to “pent-up” demand, with the upcoming year-end holiday season to further boost demand.
“We expect to see a continuation of this upward trend throughout 4Q and well into 2022 as global travel restrictions continue to ease. Our aim is to fly 60% of our pre-Covid domestic flight capacity by December 2021,” says AirAsia Group in its third quarter results statement.
On a consolidated basis for 2021, AirAsia Group’s third quarter loss saw a 23 percent year-on-year improvement to RM 733.6 million, as compared to RM 1.02 billion loss for the same quarter last year.
The reduced loss was due to a strict cost control in expenses, on areas such as operations, labour, marketing, lease and rentals, as well as IT expenditure. This despite a 36.9 percent fall in revenue for the quarter ended 30 September 2021 to nearly RM 296 million.
Net loss, however, grew 2.4 percent to RM 1.11 billion, as foreign exchange losses took a hit on the group.
For the first nine months of 2021, AirAsia Group’s operating loss amounted to RM 2.03 billion, a 24 percent year-on-year improvement as compared to the RM 2.68 billion loss for the same period in 2020.
Revenue fell 65.8 percent to nearly RM 1.02 billion, while net loss came in at RM 2.8 billion.
Cash and cash equivalents as of 30 September 2021 amounted to nearly RM 401 million, down from the RM 618 million figure on the same date in 2020.
AirAsia Group is set to end 2021 with 208 aircraft, after a net reduction of two aircraft. The size is expected to shrink further to 206 aircraft in 2022.
AirAsia Group: an investment holding company
Group chief executive Tony Fernandes says the company has “taken advantage of the downtime” in flying to develop new revenue streams, and to transform AirAsia Group into an investment holding company with travel and lifestyle portfolio businesses.
“As the world continues to open up and a strong recovery in air travel is on the horizon, we have ensured our portfolio companies are given autonomy to run their business independently to encourage innovation and ensure speed to market through even higher efficiency. Together as a group, each of our businesses continue to leverage significant data and industry leading technology to deliver the best value at the lowest cost, supported by one of Asia’s leading brands that remains committed to serving the underserved,” says Fernandes.
The company has also received shareholder’s approval to issue renounceable rights of up to RM 1 billion, with the exercise set to be completed by the year’s end. Two batches of lease restructuring were completed during the third quarter, and that the full restructuring is set to be completed this year, which will lead to a lower lease rate per aircraft. Other funding activities include approval for an 80% guaranteed loan by Malaysia’s financial guarantee insurer Danajamin Nasional Berhad, and a $150 million loan facility from a foreign lender.
“While we continue to evaluate further funding, potential monetisation and other corporate exercises, as for now we expect to have sufficient liquidity until year end and throughout 2022,” adds Fernandes.