Travel restrictions due to the COVID-19 pandemic is bringing airlines all around the world, including AirAsia, into crisis. The Malaysian-based airline’s founder and chief executive, Tony Fernandes, comments the pandemic “is by far the biggest challenge we have faced since we began in 2001”.
Airlines faces slumps amidst Coronavirus pandemic
BBC reports The International Air Transport Association recorded a 50% drop from 2019’s revenues to $419bn from a total of 290 airlines. They forecasted $230m loss on average each day, with the number of travelers declined to 2.25 billion. The massive loss is equivalent to more than a decade of growth and returns the industry back to 2006 levels. This record is way worse than what was predicted.
Though travel bans are becoming more lenient in some countries, airlines might still face slumps in the upcoming months. The economic downturn and unceasing quarantines will most likely halt economic recovery.
AirAsia into crisis: shares plummet, cash-flow slows down
The aftermath of coronavirus is a strong blow to AirAsia. Last Wednesday, BBC reported shares in AirAsia plummeted by more than 17%. The Malaysian-based airline current liabilities have also exceeded its current assets by 1.84bn Ringgit ($430m; £340m) at the end of 2019.
The grounding of AirAsia’s planes is halting AirAsia’s financial performance and cash-flow. The number of airplanes dispatched is cut low due to travel restrictions and lockdown. Moreover, with the airlines have been suspending flight since late March, AirAsia seems to be facing its biggest crisis now.
Upon this, Mr. Fernandes revealed, “we are positive in the strides we have made in bringing cash expense down by at least 50% this year”. He believes the crisis will make AirAsia even stronger as the leading “low-cost carrier” in the region.
With the coronavirus bringing AirAsia into crisis, talks upon the airline’s joint ventures and collaborations are heard. The airline has reportedly applied for bank loans and is considering proposals to raise additional capital.
