AirAsia realigns operations to focus on domestic routes


AIRASIA Group Bhd is realigning its business operations to completely leverage its domestic routes should the international borders of its destination countries remain closed this year.

The carrier said the “downtime” during the Covid-19 pandemic in 2020 allowed the carrier to set the right foundations to optimise its operations.

“The group has reviewed every aspect of our operations and made great strides in establishing a leaner and more optimised airline operation as we prepare for an expected surge in demand post-pandemic.

“Even if the borders remain closed, the group is well-prepared to rely solely on the domestic operations this year.

“We remain focused and committed to further strengthening our domestic position at this juncture, as we await the developments with regards to international air travel,” the carrier said in a filing to Bursa Malaysia yesterday.

The airline expects to see improved stability in its operations as the vaccination programme continues to be rolled out in phases across all key markets, coupled with strong support in leisure travel bubbles among low-risk countries and territories.

“Throughout 2020, the group had focused on turning the crisis into an opportunity. We accelerated our digital transformation strategy to boost our non-airline contributions to the group,” it said.

For its fourth quarter ended Dec 31, 2020 (4Q20), AirAsia’s net loss widened more than sixfold from RM384.44 million to RM2.45 billion following the depreciation of right-of-use assets and interest on lease liabilities amounting to RM654.2 million for the quarter and RM2.5 billion for its financial year 2020.

Its revenue for the quarter plummeted 12-fold from RM2.23 billion to RM267.44 million made a year ago. Its basic loss per share widened from 11.50 sen to 73.2 sen.

“The impact of the Covid-19 pandemic continues to affect the group’s operations adversely. “While international borders remained closed, the group focused on resuming limited domestic operations in the areas that we operate.

“Lockdowns announced in Malaysia for the months of October and November further dampened sales in 4Q,” it said.

AirAsia’s core segment saw its revenue fall to RM233.4 million as the passengers capacity dropped 88% compared to a year ago, contributed by the lower traction in Malaysia, the Philippines and Indonesia as international borders remained closed.

“The partial lockdown in Malaysia in October and November largely contributed to revenue falling 40% in a quarterly comparison. However, the Philippines saw its passengers doubled, while Indonesia’s passengers surged 11 times.

For the whole year, its airline segment’s revenue dropped 75% compared to the revenue made in 2019 as the passenger capacity for the entire year plunged 71%.

AirAsia Digital, the carrier’s teleport business, was impacted by the decline in cargo capacity caused by regional closing of borders as its revenue fell 77%.

Teleport, a venture under AirAsia Digital, has adapted to current conditions by utilising passenger carriers for cargo, but the growing competition in the delivery space has reduced the delivery profit margin.

“With the new reality of the pandemic, where customers are inclined to order through home delivery, the teleport segment transformed from cargo logistics to last-mile delivery, and launched a new e-commerce market space called Food, Fresh and Shop.

“Platform business more than doubled its performance in 3Q20 in terms of gross merchandise value. The order amount with food continues its growth trajectory at more than five times in 4Q20 compared to 3Q20,” he said.

AirAsia’s BigPay also saw its revenue decline compared to 4Q19 as there were lower card customers due to the limited marketing spend during the Covid-19 pandemic.

However, BigPay remittance revenue, which was introduced during the year, has shown an increase of 38% on a quarterly comparison.

AirAsia’s share price fell 0.88% or one sen to RM1.13, bringing its market capitalisation to RM4.31 billion.

Read our previous report here

AirAsia proposes to acquire remaining stake in BigLife