KUALA LUMPUR, March 27 — Affin Hwang Capital expects AirAsia Group Bhd to report steeper losses in excess of RM1.1 billion in 2020, after the airline decided to go into temporary hibernation in light of Covid-19 pandemic.
In a recent development, AirAsia has temporarily suspended all international and domestic flights operated by AirAsia Malaysia, from March 28 to April 21, 2020.
Other airlines within the AirAsia Group will similarly reduce their flight frequencies.
Affin Hwang Capital in a note today said the drastic move highlights the dire operating environment faced by the airline industry.
In tandem, the research firm reiterated a ‘sell’ on AirAsia’s shares with a lower 12-month price target to RM0.49.
Meanwhile, Philippines AirAsia, Thai AirAsia, PT Indonesia AirAsia and AirAsia India have similarly reduced their flight frequencies.
“To further manage and contain costs, the management and senior employees of AirAsia have volunteered for a salary cut, ranging from 100 per cent at the very top to 15 per cent,” it said.
To further contain its costs, Affin Hwang Capital expects AirAsia to negotiate with its suppliers to reduce their operating costs, for instance operating leases, airport charges, fuel, operation and maintenance costs.
“We now expect AirAsia to report larger losses in 2020-2021 after incorporating lower revenue in view of the temporary suspension of flights and dire industry outlook; and lower operating costs arising from savings in staff cost, operating leases, fuel and operations and maintenance expenses,” it said. — Bernama
