KUALA LUMPUR - The future of AirAsia Group is in “significant doubt” due to travel restrictions imposed during the coronavirus (COVID-19) pandemic, said Ernst & Young.
According to the auditor, AirAsia's current liabilities exceeded its current assets by US$430 million at the end of 2019.
“Further, in early 2020, the global economy, in particular the commercial airlines industry, faces uncertainty as a result of the unprecedented COVID-19 pandemic,” Ernst & Young said in an unqualified audit opinion statement to Malaysia’s stock exchange Bursa Malaysia on Tuesday (7/7).
“The travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel which impacted the Group’s financial performance and cash flows.”
As previously reported by IDNFinancials.com, AirAsia posted a US$223 million net loss in the first quarter (Q1) of 2020. During the period, it slashed capacity across all airline units by 19% while passenger numbers slipped 22%.
“This is by far the biggest challenge we have faced since we began in 2001,” said AirAsia Group CEO Tony Fernandes in an official statement on Monday (6/7).
“We have applied for bank loans in our operating countries to shore up our liquidity. We have also been presented with proposals to raise capital to strengthen our equity base and/or liquidity from a number of investment bankers, lenders, [and] potential investors to help the company weather the storm caused by the COVID-19 pandemic.” (MS)