Air Asia’s future is in “significant doubt” according to Ernst & Young auditors. Asia’s largest low-cost carrier has been hit hard by the massive drop in air travel as a consequence of the COVID-19 pandemic and strict travel restrictions.
In a statement issued to the Kuala Lumpur stock exchange by Ernst & Young, the carrier’s substantial level of debt was highlighted, with current liabilities exceeding current assets by 1.84bn ringgit (US$430m). Shares in the Malaysia-based carrier fell 17% on Wednesday, a day after trading was halted.
With so many planes currently grounded by the pandemic, the current financial performance indicates the “existence of material uncertainties that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern,” Ernst & Young said in its unqualified audit opinion statement.
Having commenced flight suspensions in March, Air Asia reported its largest ever quarterly loss at 803.8m ringgit. “This is by far the biggest challenge we have faced since we began in 2001,” the airline’s founder and chief executive Tony Fernandes said in a statement. “Every crisis is an obstacle to overcome, and we have restructured the group into a leaner and tighter ship,” adding that: “We are positive in the strides we have made in bringing cash expenses down by at least 50% this year, and this will make us even stronger as the leading low-cost carrier in the region.”
In addition to looking at alternative ways of raising capital and applying for bank loans, the Asian low-cost carrier is considering joint ventures and collaborations with other airlines.
