Malaysia’s flagship budget carrier AirAsia Group Bhd on Monday reported a first-quarter loss, battered by a collapse in air travel demand resulting from the coronavirus pandemic, as well as losses on a fuel hedges settlement.
AirAsia reported a net loss of 803.3 million ringgit ($187.91 million) for the three-month period ended March, from 96.1 million ringgit net profit in the year-ago period.
This was the company’s biggest first-quarter loss since it listed on the Malaysian bourse in November 2004, based on Refinitiv data.
Revenue was 15% lower at 2.31 billion ringgit.
Passengers carried during the quarter fell 22% to 9.85 million, while the passenger load factor – a measure of how full planes are – dropped 11 basis points to 77%. Cost per unit rose 36%.
The group also said fair value losses on derivatives, as well as additional depreciation and interest on operating lease aircraft had also impacted earnings.
AirAsia said demand had been positive since the carrier gradually restarted domestic routes after grounding most of its fleet in March due to movement restrictions to contain the coronavirus.
“We are aiming to increase our flight frequencies to around 50% of our pre-COVID operations and we look forward to resuming all domestic routes in the coming weeks and months,” President for the group’s airlines business Bo Lingam said in a statement.
Group CEO Tony Fernandes said the company had sought payment deferrals from suppliers and lenders to ensure sufficient working capital.
“We have also restructured a major portion of the fuel hedges with our supportive counterparties and are still in the process of restructuring the remaining exposure,” he said in a statement.
AirAsia has also have applied for bank loans in countries it operates in to shore up liquidity, the statement said.
The group said the initiatives so far are expected to result in at least a 30% cost reduction year-on-year in 2020, and it is hopeful of further cost reductions.
AirAsia had received proposals from investment bankers, lenders and potential investors last month to help the airline cope with the coronavirus crisis.
The company said on Monday that it had ongoing deliberations for joint-ventures and collaborations that might result in additional third party investments in specific segments of the group’s business.
(Reporting by Mei Mei Chu, editing by Louise Heavens)
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