AirAsia posts record loss as virus annihilates demand

Bloomberg

AirAsia Group Bhd posted its largest quarterly loss on record as restrictions imposed by governments to contain the spread of the coronavirus decimated travel.
Southeast Asia’s second-biggest budget carrier by market value reported a net loss of 992.9 million ringgit ($238 million) in the three months ended June 30 versus net income of 17.3 million ringgit a year ago, according to an exchange filing. Sales plunged 96% to just 119 million ringgit.
Chief Executive Officer Tony Fernandes has been in talks
for joint ventures and collaborations that may result in additional investment for the beleaguered airline. Bank loans and other capital-raising proposals are also being weighed.
“During the lockdown, we took the opportunity to restructure the group and lay the foundations for a sustainable and viable business for the future,” Fernandes said in a statement. “Although we do not foresee capacity returning to pre-Covid-19 levels in the short term, we expect demand to gradually continue to grow throughout the second half of 2020 and for the airline to be profitable in the years to come.”
Airlines globally have grounded thousands of planes as countries shut borders and restricted people’s movements. According to the International Air Transport Association, the industry likely won’t recover to pre-pandemic levels until 2024.
Some signs of a recovery are at least emerging for regional aviation, with Singapore and Malaysia agreeing to form travel bubbles to allow people to move between the two countries. AirAsia, which is based in Malaysia, resumed flights in the domestic market in late April after suspending them for a month.

Analysts ditching AirAsia in droves after record loss
Bloomberg

AirAsia Group, which helped pioneer a wave of low-cost air travel in the region, has fallen even further out of favour after posting a record loss.
At least eight analysts tracked by Bloomberg have revised down their recommendations or price targets on AirAsia’s shares since it announced a net loss of 992.9 million ringgit ($238 million) for the quarter through June. One of them, CGS-CIMB’s Raymond Yap, slashed his target by 74% to just 0.15 ringgit.
From a total of 20 analysts, 18 have sell or equivalent ratings on AirAsia and the average price target is
0.56 ringgit. The airline fell 2.8% to 0.685 ringgit on Wednesday, taking its loss for this year to 60%. Its long-haul unit AirAsia X Bhd has fared similarly poorly.
While not enough to sway most analysts, Malaysia-based AirAsia’s earnings statement pointed to some encouraging trends in bookings, flight frequencies and load factors as travel restrictions are lifted in the countries where it operates.