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  • Joe Breitfeller

AirAsia Group Berhad Reports Full Year 2020 Net Loss of $1.4 Billion

AirAsia Group Berhad has reported a fourth quarter EBITDA loss of RM2.1 billion (US $506 million) on a 40 percent decline in revenue. For the full year, the Group reported an EBITDA loss of RM3.2 billion (US $771 million) on a 74 percent year-over-year revenue decline.

AirAsia X Thailand Airbus A330neo - Courtesy Airbus

On Monday (March 29, 2021), AirAsia Group Berhad reported their fourth quarter and full year 2020 financial results. The Group reported a fourth quarter EBITDA loss of RM2.1 billion (US $506 million) on a 40 percent revenue decline versus the same period last year to RM267 million (US $64.3 million). For the full year, AirAsia reported an EBITDA loss of RM3.2 billion (US $771 million) on a year-over-year revenue decline of 74 percent to RM3.1 billion (US $746.5 million). During the year, the company reduced fixed costs by 52 percent and established leaner and optimized operations. AirAsia expects an improvement in international travel during H2 2021 and a full recovery within the next two years.

The Group’s full year net loss after taxes was RM5.9 billion (US $1.4 billion) versus a FY 2019 net loss of RM283 million (US $68 million). AirAsia’s 2020 results were impacted by a shortfall in revenue associated with he global COVID-19 pandemic and several one-offs including a fuel hedging loss of RM972 million (US $234 million), an impairment of assets and receivables of RM1.9 billion (US $458 million) and bankruptcy costs related to AirAsia Japan of RM 20 million (US $5 million).

Speaking on the company’s airline performance, AirAsia Group Berhad’s Airlines President, Bo Lingham, said,

“Our strong rebound in 3Q2020 for the Malaysian domestic market was hampered in 4Q2020 with softer performance due to the partial lockdowns imposed in October and November. Nonetheless, with active capacity management, load factor was healthy at 72% in 4Q2020. Performance in our other core markets was positive as AirAsia Indonesia carried five times more passengers in 4Q2020 compared to 3Q2020, resulting in an increase in load factor by 10 ppts QoQ [Quarter-over-Quarter]. AirAsia Philippines almost doubled the number of passengers carried, QoQ. Our associate, AirAsia Thailand, operated 116% of pre-Covid domestic capacity in December and utilized 70% of its fleet by the end of December.

“RASK for AirAsia Philippines outperformed other entities reporting an increase of 101% in 4Q2020 and 8% overall in FY2020, due to higher number of chartered flights.

“2020 was a year of survival but we have reviewed every aspect of our operations and made great strides in establishing a leaner and more optimized airline operation as we prepare for an expected surge in demand post-pandemic. Going forward, we expect to see improved stability in our operations as vaccinations continue to be rolled out in phases across all key markets. Furthermore, our robust business model provides confidence for a fast recovery. Even if borders remain closed, we are well-prepared to rely solely on domestic operations alone this year.

“We remain focused and committed to further strengthen our domestic position at this juncture as we await developments in regards to international air travel. In Malaysia, we are pleased that the domestic leisure bubble kicked off in mid-March following the easing of restrictions including the relaxation on cross-state tourism among states under the Recovery Movement Control Order status. We are encouraged to see strong pent-up demand translating into spontaneous travel and an increase in forward bookings, as we briefly saw in December 2020 prior to the lockdown in January 2021. In Thailand, we are set to resume operations on all 40 domestic routes from April, including cross-region connections to meet the surge in demand, indicating a strong recovery to pre-Covid performance levels.

“In regards to international routes, we are optimistic that operations will resume in the second half of 2021, highly influenced by the efficiency of vaccination rollouts globally. Within Asean, most countries are in the midst of vaccinating their population in phases to reach 40%-50% by 3Q2021. Once borders are lifted, we expect to see a strong recovery in our overall performance given our low-cost model and dominant positioning in Asean.

Commenting on the Group’s outlook, AirAsia Group Berhad’s CEO, Tan Sri Tony Fernandes, said in part,

“Throughout 2020 we focused on turning the crisis into an opportunity. We accelerated our digital transformation strategy to boost our non-airline contributions to the Group. We have used the downtime in flying to lay the foundations for more robust operations post-pandemic and put in place the right platform for a sustainable and successful future by rebranding ourselves as more than just an airline with the airasia super app.

“Our 52% reduction in fixed costs in FY2020 demonstrated our commitment towards strict cost-cutting strategies and tight cash flow management that we started in 1Q2020. All of our fuel hedges have been restructured, thus we expect minimal mark-to-market in 2021. Significant cost savings were delivered through our headcount rationalization and salary cuts across the Group, as well as through negotiations with our supportive lessors and creditors. To further reduce our cash burn, we have disposed of a 32.7% stake in AirAsia India, effectively ceasing the entity as an associate. We have also closed down AirAsia Japan in view of the highly challenging operating environment post-pandemic. All of these tough decisions were made to ensure a quick recovery in Asean where our brand is strongest.

“In the first quarter of this year, we have successfully completed two tranches of our private placement exercise. Raising a total of RM336 million, both tranches made up 470.21 million shares, representing 14.07% of our total issued shares. Key investors include Hong-Kong based Dr. Stanley Choi, David Bonderman and several Partners at TPG, investing in their personal capacity as well as Aimia Inc. We are honoured and grateful for the strong vote of confidence shown by the investors in our future prospects with our digital transformation coupled with the onset of an air travel revival soon…”

Source: AirAsia Group Berhad