SEPANG: AirAsia Group Bhd slipped into the red with a net loss of RM992.9 million in the second quarter (Q2) ended June 30, 2020, from a net profit of RM17.3 million recorded a year ago.
In exchange filing today, the low cost carrier said the net loss incurred was due to significant collapse in demand from the widespread border closures and certain onerous travel restrictions dragged by the Covid-19 pandemic.
Its Q2 revenue plunged 95.9 per cent to RM118.96 million from RM2.9 billion posted previously, dragged by fuel swap losses and the group's hibernation of its fleet at the end of the first quarter.
However, AirAsia said its operation had gradually resumed operations at end of May or early June as domestic travel restrictions eased.
For the first-half of the year, AirAsia posted a net loss of RM1.8 billion compared to a net profit of RM111.78 million.
Its revenue plummeted 95.6 per cent to RM2.4 billion from RM5.6 billion recorded a year ago.
The group said it had implemented cost containment measures such as rightsizing of manpower, salary cuts for management, staff and directors, negotiation of deferrals with lessors, suppliers and partners and restructuring of fuel hedging positions.
AirAsia negotiated for deferrals with lessors but pursuant to the practical expedient available under Amendments to MFRS16 and Covid-19 as well as related rent concessions, the income statement charge of depreciation and interest were not adjusted.
Group chief executive officer Tan Sri Tiny Fernandes said AirAsia had pivoted from an airline to an all-in-one digital lifestyle company anchored on travel.
"There is a silver lining in every crisis and we have used the downtime to review every aspect of our operation and to expand and transform our three core digital businesses - the travel and lifestyle platform airasia.com, our logistics division Teleport, and fintech through BigPay and AirAsia BIG Loyalty," he said in a separate statement today.
During the lockdown, he said the group had restructured itself and laid 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 said.
Fernandes said fuel hedging had also been restructured.
Its operating costs had been reduced and it had also received support from lessors for deferrals, he added.
"We are seeing pleasing forward demand for travel already, as witnessed recently for the launch of our AirAsia Unlimited Pass for AirAsia X, domestic Malaysia and domestic Thailand which were well-received and sold out quickly.
"We believe we have set the right foundations for the airline in Q2 of 2020 as we move into the second half of the year, with the continued understanding of our customers and support from our lessors, hedge counterparties and business partners. Furthermore, we are working together with our creditors on repayment plans."
He expects AirAsia to have sufficient liquidity in the second-half of 2020 and 2021 as revenue should improve in tandem with rising domestic demand.
"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," he said.
Fernandes said AirAsia would actively explore capital raising opportunities in each of its key operating markets which should aid in sustaining our cash flow levels.
"Just like every crisis we have faced before, I remain optimistic that we will come out stronger. Finally, we continue to review partnerships and opportunities that support our digital transformation. Value, choice and innovation are three cornerstones of our brand and we have many more digital products in the pipeline which we will announce in coming months. Airasia.com is a platform that will soon rival the best super apps in Asia," he added.