Tony Fernandes, CEO of the AirAsia Group, is optimistic that the low-cost airline will bounce back to profitability next year but will look to raise $469 million in the next six months to be in a “very comfortable” position.
Fernandes expressed his confidence that AirAsia can overcome the heavy losses brought on by the COVID-19 pandemic in an interview.
Air Asia gave details of its plans after its shares fell sharply on Wednesday following a statement by the auditors of the group, Ernst & Young, expressing doubts about the capacity of the airline to continue as its liability exceeded its assets by $430 million.
Fernandes, who has carved an image for himself as Asia’s answer to Richard Branson said “I know I’m ambitious, but I am confident that in 2021 we can be profitable.”
According to Fernandes, the new shares will be put with a third-party investor, a portion of the funding will come from a share sale that would take place over the next six months. “We got a lot of attention from all over. Our corporate finance department is working hard to finalize the best deal,” he said.
He played down rumors that AirAsia would merge with the crisis-wracked Malaysia Airlines, the flag carrier in the region, saying the two airlines served separate markets.
Fernandes also dismissed rumors that the airline would pull out of its joint ventures in Japan and India. He said both countries were still promising and had no plans to withdraw from those markets.
Fernandes said domestic flights have resumed at 50% capacity, with a 60% load factor in July alone, a sign of increasing demand. The airline plans to fly domestically at a capacity of 90% by the end of the year, while international flights are likely to witness a gradual increase.
“We’ve got to laugh, we’ve got to be positive,” he said. “Flying is not going to disappear.”
In the early 2000s, AirAsia pioneered low-cost travel across Asia, feeding the insatiable demand for cheap flights from a rapidly-emerging middle class, and became one of the top budget carriers in the region.
