AirAsia Group: COVID-19 initiatives expected to lead to 30% cost reduction in 2020

7 July, 2020

AirAsia Group provided (06-Jul-2020) the following COVID-19 update:

  • Since the resumption of domestic services, demand has been positive, with passenger load factors increasing week by week;
  • To ensure sufficient working capital, the group has sought payment deferrals from suppliers and lenders;
  • Restructured a major portion of fuel hedges with counter parties and is still in the process of restructuring the remaining exposure. This will help deal with the excess of hedged volume against expected fuel consumption post-COVID-19 and reduce the hedging losses if fuel price remains at current levels;
  • Management and senior employees of AirAsia Group volunteered a salary sacrifice, renegotiated contracts and deferred all nonessential expenditures;
  • Confirmed initiatives so far are expected to result in at least a 30% cost reduction year-on-year in 2020. The group is hopeful of further cost reduction beyond 30% in 2020;
  • Applied for bank loans in operating countries to shore up liquidity. It has also been presented with proposals to raise capital to strengthen its equity base and liquidity from a number of investment bankers, lenders as well as potential investors. [more - original PR]