AirAsia Group Bhd boss Tony Fernandes insisted on Thursday the top budget carrier would emerge “stronger” from the coronavirus pandemic despite a warning about its future, and said the airline was hopeful of raising a sizeable cash injection.
In an interview with AFP, the colourful CEO said he never imagined the industry could face such a crisis, which has triggered massive layoffs worldwide and led to some carriers collapsing.
“I never believed the aviation industry could be hit this hard. But . . . we are still flying,” he said from his office in downtown Kuala Lumpur.
“This will not go on forever. We will come out stronger.”
AirAsia pioneered low-cost travel across Asia in the early 2000s, feeding insatiable demand for cheap flights from a rapidly-emerging middle class, and became one of the region’s top budget carriers.
But the Malaysian carrier reported dismal first-quarter results this week after grounding almost its entire fleet due to the virus, prompting auditor Ernst & Young Global Ltd to warn of “significant doubts” about its future.
It also noted the airline’s liabilities currently exceeded its assets by 1.84 billion ringgit ($430 million).
Fernandes said the airline could not “run away” from the assessment but added: “We had four months of no revenue, that does not mean liabilities will exceed assets for the rest of our lives.”
AirAsia was taking steps to minimise costs, including cutting about 7.5 per cent of 23,000 staff across its businesses, he said, but added that he hoped there would not be any further job losses.
Fernandes said the airline was in talks with international and local lenders to raise funds to weather the crisis, adding that he was hoping to raise “more than one billion” ringgit – and possibly up to double that within six months.
Business has rebounded strongly since flights resumed in late April, and Fernandes said he was confident conditions would improve, particularly in AirAsia’s key markets.
He said: “We are flying domestically, we know that international flights are not far away.
“AirAsia is in a good market because Covid has been pretty well controlled in [Southeast Asia] and North Asia.”
He said the impact on budget carriers would not be as severe because people were more likely to fly short-haul.
Long-haul travel would “take a while” to recover, he added.
He also played down speculation AirAsia might merge with crisis-wracked Malaysia Airlines, the country’s flag carrier, saying the airlines served different markets.
“A country needs a full service airline and a country needs a budget airline,” said Fernandes, who has carved an image for himself as Asia’s answer to Richard Branson.
But Fernandes, who is also the co-owner of London football club Queens Park Rangers, added that the carriers could collaborate in areas like engineering.
Malaysia Airlines has struggled to recover from two crises in 2014 and the government has been seeking a strategic partner for the carrier.
The auditor’s warning sent AirAsia’s share price tumbling almost 18 per cent on Wednesday, although it rebounded six per cent to 0.75 ringgit on Thursday.
And Fernandes insisted he was “confident” about the future. “We’ve got to laugh, we’ve got to be positive . . . Flying is not going to disappear.”