KUALA LUMPUR: AirAsia Group Bhd (AirAsia) will implement various cost containment measures to cope with the Covid-19 outbreak, following initiatives undertaken by its peers to keep their operations airborne.
They include pay cut, free munch and external training suspensions, duty travel restriction and big social events cancellations for the year, according to AirAsia’s memo to employees seen by the New Straits Times.
Acting chief executive officer and airlines president Bo Lingam said the measures would be taken temporarily to reduce cost, conserve cash and protect the low-cost carrier’s (LCC) future business.
“Senior management and I will review them periodically until the situation normalises,” he said, adding that times were getting tougher as Covid-19 outbreak had spread to Europe and America, dragging down global economy.
“Under these conditions, everyone needs to be financially prudent and proactive. Companies around the world have to take extraordinary steps to sustain their business. We are no different,” he said in a message addressed to AirAsia’s Allstars.
He added that AirAsia had reviewed every option to minimise the impact of any measures on its employees and the company.
Bo said AirAsia’s highest earners had decided to lead by example and agreed to take a pay cut but there was no specific quantum given.
The memo also detailed out that the carrier’s free munch suspension would be for all non-operations managers and above.
The airline decided to restrict duty travel unless absolutely necessary, and use voice or video conferencing.
Bo said the airline may announce additional measures if the situation prolongs or worsens.
In a separate statement on Monday, Bo said the measures would minimise the impact on the LCC’s employees, while ensuring business continuity with a priority on flight operations’ safety and security.
“Containing and managing costs has always been in our DNA as an LCC and this is the one quality that sets us apart from our peers.”
He said AirAsia had been impacted by the sharp slowdown in the past few months due to travel restrictions and flight cancellations not only for China routes but other destinations.
Bo assured that the cost containment measures would have zero or minimal impact on most AirAsia employees especially those in the lower-income bracket.
“AirAsia continues to monitor the developments and employ aggressive marketing and education strategies to instil the confidence of flying back in the travelling community,” he said.
Bo said AirAsia will redeploy its capacity to domestic and intra-Asean flights to spur local and regional tourism.
“We are also continuously engaging industry stakeholders and tourism authorities for incentives as well as marketing and promotional collaborations,” he said.
Meanwhile, CGS-CIMB Research expects AirAsia to incur a core net loss of RM1.1 billion following lower demand and yields in Malaysia, Thailand and the Philippines.
The firm in a report last month, noted that this would be due to significant exposures to China, Hong Kong and Macau.