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Air Asia Posts Second Quarter Results, Focuses on Short-Term Domestic Market Recovery

A Philippines AirAsia A320 aircraft (Photo: aeroprints.com [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)])

After reporting losses accounting for MYR 1.18 billion ($283 million) during the second quarter of the year, Air Asia is looking to focus its efforts on recovering domestic markets in the countries it serves first, as countries such as Thailand, Malaysia and Indonesia begin to reinstitute local mobility.

This differs from the carrier’s previous strategic outlook which aimed at serving potential “travel bubbles” between Southeast Asian countries in an attempt to recover part of regional tourism. This was first reported by FlightGlobal.

At the airline’s second-quarter financial results presentation, Tony Fernandes Air Asia’s CEO said, “Reviving domestic travel is high on our priority list as an opportunity to strengthen our domestic position in all of our key operating markets. Demand is expected to build up in  3Q2020 and 4Q2020, supported by both business and leisure travel. With lockdowns being lifted, consumers are keen to explore vacation spots in their own respective countries.

“By Q4 2020, we expect to run at 70-75% domestic capacity for AirAsia Malaysia, 60% for AirAsia Philippines and 35% for AirAsia Indonesia. AirAsia Thailand and AirAsia India, which have been ramping up at a faster pace, are expected to recover to 105% and 75% of pre-Covid-19 domestic capacity by the end of the year”, he added.

Despite ramping up losses of MYR1.18 billion ($283 million) during the second quarter of the year, as revenues decreased by 96%; executives believe they can return to 75% pre-pandemic levels in its Malaysian and Indian subsidiaries.

Fernandes also commented that the airline’s efficient cost structure and cash flow management enables it to be able to rely on operating domestically in the short term if international markets take longer to resume. In the second quarter of the year, the group’s expenses decreased by 53%, due to pay cuts and layoffs across the group and strict cost control measures across its different operational areas.

Looking to raise additional cash in order to navigate throughout a smaller post-pandemic environment, the Kuala Lumpur based airline group has applied for bank loans in its operating markets as well as presented proposals for additional capital injections to various investors.

The group has slowly seen the number of passengers rise up as the airline gradually began to resume flights. From the end of May, the carrier has tripled the number of passengers carried by AirAsia Malaysia and doubled the number of passengers carried by AirAsia Thailand, while six times the number of passengers carried by AirAsia India, reflecting the strong rebound demand for air travel.

Jose Antonio Payet
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  • Jose Antonio Payet

    As a geography nerd, Jose has always been fascinated by the complexities of the airline industry and its ability to bring the world closer together. Born and raised in Peru, now studying in the UK. he has travelled around America, Europe and South East Asia. His favorite aircraft is the Boeing 767-300, which he has flown many times during his childhood; although now the A350 is slowly growing up on him.

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