by S BIRRUNTHA / pic by TMR FILE
AIRASIA Group Bhd’s 33%-owned associate company in Japan, AirAsia Japan Co Ltd (AAJ), filed for bankruptcy yesterday after announcing last month it would cease operations in the country.
In a filing with Bursa Malaysia yesterday, AirAsia stated the move was due to insolvency resulting from a demand slump in travel induced by lockdown restrictions related to the Covid-19 pandemic.
“Total cost of investment in AAJ has been fully written down,” it stated.
On Oct 5, the group announced that its board of directors had decided to cease AAJ’s operations with immediate effect.
It noted this would reduce the cash burn of AAJ and the group amid the highly challenging operating conditions in Japan which have been aggravated by the Covid-19 pandemic.
AirAsia Group holds the interest in AAJ via its shareholding in AirAsia Investment Ltd.
Separately, AirAsia said it remains confident of returning stronger, more robust and faster than many competitors in this new world of travel, given the recent positive developments in the fight against Covid-19.
In a statement yesterday, the group stated it expects its business to return to pre-pandemic level on many routes by mid-2021, if not earlier, due to the general outlook that air travel will be bouncing back soon.
AirAsia is positive it will continue to chart more robust growth going into 2021, helped by the group’s stringent cost containment strategies, the successful pivot of airasia.com into a travel and lifestyle super app and the steady growth of its non-airline businesses.
Its president of airlines Bo Lingam said positive developments on travel bubbles already being formed in Asia and numerous Covid-19 vaccines in near-final stages of testing are great news for the industry.
He said AirAsia already sees vital signs of recovery in its key domestic markets where there is much pent-up demand.
“AirAsia’s domestic services in Thailand are already at close to 100% of pre-Covid capacity levels, and there are similar strong positive signs from across the group including in Malaysia, Indonesia and the Philippines, indicating that forward bookings for future travel are already on the rebound in our major markets.
“I am not alone in this prediction. It’s a common view shared by many industry colleagues — that it won’t take very long before mass tourism returns to normal globally,” he noted.
Lingam highlighted that with a network of over 160 destinations across Asia and the Pacific, AirAsia is well-positioned in the aviation travel market to recover faster than many other airlines.
“A real bonus point is that the majority of our major international markets that are also tourism hotspots like Thailand, Singapore, Australia, Korea, Indo-China and Taiwan are coping extremely well with the pandemic and they are very likely to reopen borders first.
“We continue to work closely with tourism and airport partners to stimulate domestic air travel while making good progress in discussions on the formation of travel bubbles with low-risk international destinations,” he said.
AirAsia said its third-quarter operating statistics for 2020 highlighted the group’s path to recovery, as it showed improvements from every major domestic airline in the group across many key metrics in comparison to the preceding quarter.
These include a 36% increase in passengers carried by AirAsia Malaysia, 79% increase in passengers carried by AirAsia India and an increase of 65% of passengers carried by AirAsia Thailand.
It added that AirAsia’s revenue performance improved with sales across the group up 57% this week versus the preceding week, supported by the latest airasia.com Super Sale that commenced on Monday.
Furthermore, it said sales in Thailand for domestic travel reached 93% of pre-pandemic levels yesterday, and there has been a marked improvement in Indonesia with sales volume up 52% and sales value soaring 126% over the past week, as the airline continues to inject more capacity into these markets.
AirAsia’s share price was up 2% or 1.5 sen at close yesterday at 76.5 sen, giving it a market valuation of RM2.56 billion.