Tony Fernandes: AirAsia will pull through COVID-19 crisis, to be profitable in 2021

The heavy losses sustained by low-cost carrier AirAsia Group due to the ongoing Covid-19 pandemic have proven to be undaunting for its chief executive officer Tan Sri Tony Fernandes, who remains confident it can be in the black by 2021.

In an interview with Nikkei Asian Review published today, he said the group will also look to raise RM2 billion within the coming six months so as to be in “a very comfortable position”.

“At RM1 billion, we are comfortable. But if we can raise RM2 billion, we would be in a very comfortable position. I know I am ambitious, but I am confident that in 2021 we can be profitable,” Fernandes was quoted as saying.

His remarks came as AirAsia revealed its plans to raise capital, following its external auditor Ernst and Young’s assessment yesterday which doubted the group’s ability to continue as a going concern, resulting in a sharp drop of AirAsia’s shares.

Fernandes added that a portion of the funding would come from a share offering, to occur within the next six months.

He said the new shares will be placed with a third-party investor, and that much interest has been stimulated by this.

On the group’s joint ventures in Japan and India, the chief executive officer dismissed any speculation that it might pull out of them, as both countries are still promising and no plans have been made to withdraw from those markets.

“In Japan and India, we have excellent partners, and there are no plans to exit, at least at the time being. We need to expand in these markets, and maybe in one more year they can be profitable,” he said.With domestic flights resuming at 50 per cent capacity and a load factor of 60 per cent in July alone, Fernandes said this is a sign of growing demand. AirAsia is expecting to be running at 90 per cent capacity domestically by the year’s end, while its international flights will increase gradually.

Other supporting factors include rising air fares, low fuel costs and increased travel demand in countries where AirAsia operates.

Concerning Ernst and Young’s statement assessing the group’s continuity, he called it completely fair as AirAsia was not the only airline facing a tough environment due to the pandemic.

“The lines that Ernst and Young wrote will be on the papers for most companies out there, not only airlines. We are all affected by this unprecedented event,” Fernandes said.

On Monday, the group reported a first-quarter net loss of RM804 million, reversing a RM96 million profit for the year-earlier period. The pandemic has closed the borders of most of its key markets including Malaysia, Thailand, Indonesia, the Philippines, China and India, resulting in only 9.85 million passengers carried by AirAsia in the first quarter, down by 78 per cent from a year earlier. —  Malay Mail

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