THE START OF THE FALL OF TONY FERNANDES? TRADING IN AIRASIA SHARES HALTED OVER ‘DOUBTS ON ITS ABILITY TO CONTINUE AS A GOING CONCERN’ – EVEN AS KHAZANAH ADMITS IT’S STILL HAVING DIFFICULTY FINALIZING DECISION ON PARTNER FOR ALMOST BANKRUPT MAS
SEPANG 16 OGOS 2019. Perdana Menteri, Tun Dr Mahathir Mohamad semasa majlis Lawatan ke Ibu Pejabat AirAsia RedQ, KLIA dan turut bersama Menteri Pengangkutan, Anthony Loke Siew Fook?, Pengerusi AirAsia X, Tan Sri Rafidah Aziz, Ketua Pegawai Eksekutif Kumpulan AirAsia, Tan Sri Tony Fernandes, Pengerusi Eksekutif AirAsia, Datuk Kamarudin Meranun. NSTP/AHMAD IRHAM MOHD NOOR.
Shares in Malaysia’s AirAsia Group Bhd were halted today after its auditor said there were material uncertainties that cast doubt on the budget carrier’s ability to continue as a going concern.
In an unqualified audit opinion on the airline’s earnings results for 2019, Ernst & Young PLT said the financial statements were prepared on a going concern basis, which is dependent upon recovery from the Covid-19 pandemic and the success of fundraising efforts.
In response, the airline said in a statement that Malaysia’s stock exchange had granted it 12 months relief from being classified as a financially distressed firm – a classification that would require it to submit a business improvement plan.
Malaysia has also extended the relief to other companies who may face a hit to business from the pandemic.
Like airlines around the world, AirAsia has been hit hard by the coronavirus which has decimated travel demand. It posted a first-quarter loss of RM803.3 million, its biggest loss for the quarter since its listing in November 2004.
The company said last month it was evaluating proposals for raising capital to strengthen its equity base and liquidity.
AirAsia management has guided that an equity raising via a placement or rights issue looks imminent, Affin Hwang Capital analyst Isaac Chow wrote in a note to clients yesterday.
AirAsia did not comment on the fundraising efforts.
The trading halt is due to be lifted from 2.30pm today, a release to the exchange said.
Finance Minister Tengku Zafrul Aziz told Reuters in June that the ministry had not provided financial aid to any of the country’s airlines and that the airlines have said they “can do okay, on their own”.
AirAsia said on Monday there were ongoing deliberations for joint ventures and collaborations that might result in additional third-party investments in specific segments of the group’s business.
It has also sought payment deferrals from suppliers and lenders and halted all deliveries of Airbus SE jets this year as it seeks to cut costs.
AirAsia’s shares have halved in value so far this year, giving it a market capitalisation of around US$670 million (RM2.87 billion).
Elsewhere in the region, Thai Airways International PCL and Virgin Australia Holdings Ltd have entered bankruptcy protection due to their inability to pay creditors. – Reuters
Khazanah still reviewing potential partners for ailing MAB
Malaysia’s sovereign wealth fund Khazanah Nasional Bhd is still reviewing potential partners for ailing Malaysia Airlines Bhd (MAB).
In its 2019 annual report released yesterday, the government’s investment arm said it had shortlisted four proposals on the partnership plans.
“Khazanah also evaluated options to resolve key issues facing Malaysia Airlines and launched a process to evaluate potential partners for the airline in 2019.
“A total of nine proposals were received, of which four were shortlisted. For 2020, Khazanah will continue to work closely with the government and MAB to further review the proposals and finalise a decision on the appropriate strategic option moving forward,” the Khazanah report uploaded on its website said.
MAB reported a net loss of RM791.70 million for the financial year ending December 31, 2018, as compared with RM812.11 million in 2017, while revenue improved marginally by 0.8 percent to RM8.73 billion from RM8.67 billion, according to The Malaysian Insight.
The aviation industry was “muted” following global border closures of airline journeys to curb the spread of Covid-19. This has impacted the bottom lines of airlines and downsized operations were seen as one of the options to remain relevant in the business.
It was reported that MAS asked its 13,000 employees to take voluntary unpaid leave due to Covid-19, while AirAsia Bhd laid off 111 flight attendants, 172 pilots, and 50 engineers.
Last month, Bloomberg reported that Khazanah was considering to inject fresh capital worth up to RM5 billion into MAB to see it through the Covid-19-induced slump in bookings.
Finance Minister Tengku Zafrul Abdul Aziz immediately denied that the government would bail out MAB.
In 2015, the national carrier embarked on a five-year plan to turn around Malaysia Airlines.