AirAsia to reopen all Malaysian routes and push overseas flights

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KUALA LUMPUR – AirAsia sees brighter skies ahead after Malaysia lifted interstate travel restrictions, with the low-cost carrier also pushing to restart international flights to Thailand, Sri Lanka and the Maldives as soon as possible. next week, its president told Nikkei Asia.

Bo Lingam, Chairman of AirAsia Group for Flight Operations, said in an interview on Monday that the company was “very relieved” at the government’s decision to reopen internal borders as it would benefit both the carrier and its workforce. ‘artwork.

The airline aims to embark on domestic travel by reaching a pre-pandemic capacity of 39 local routes and 169 daily flights by the end of November, according to Bo.

“We will open up all the domestic destinations we flew before COVID by the end of next month, involving more than 45 planes,” he said.

The comments came after the federal government authorized nationwide interstate travel on Monday. The airline has been hit hard by the coronavirus pandemic, with hundreds of its employees laid off and planes idling after national and international borders were closed and travel was restricted.

Prime Minister Ismail Sabri’s government fully reopened the state borders in the Southeast Asian country for the first time this year, allowing millions of residents to travel for business and leisure. Fully vaccinated Malaysians can also travel abroad without police approval.

Air travel is essential in Malaysia as the country’s states are spread across the Malay Peninsula as well as the island of Borneo east of the South China Sea.

“The resumption of domestic service will be extremely good financially for the airline as we would be able to pay the pending bills from our suppliers who have been very nice to us so far,” said Bo.

He added that the carrier is also planning to start international commercial flights to Thailand, Sri Lanka and the Maldives as early as next week.

“We have applied for permits in these countries and we hope to receive them next week, after which we can sell tickets and carry passengers,” he said.

AirAsia’s share price jumped nearly 10% on Monday, settling at 1.28 ringgit – the highest since February 2020 and surpassing the nearly 1% gain in the Bursa Malaysia index. Airline shares fell 3% to 1.25 on Tuesday ringgit at noon.

The airline’s net loss in 2020 climbed to 5.1 billion ringgits ($ 1.2 billion) of red ink of 315.8 million ringgit in 2019. Revenue also plunged from 11.9 billion ringgit in 2019 to 3.1 billion ringgit last year.

For the first half of 2021, the airline reported a net loss of 1.3 billion ringgit on net profit of 1.8 billion ringgit in the same period last year. Revenues, meanwhile, fell to 686.8 million ringgit from 2.5 billion ringgit.

AirAsia recently secured a federally guaranteed ringgit 500 million loan as part of a framework put in place to help businesses directly affected by the pandemic. The loan was part of a 2 billion ringgit fundraising exercise offered by airline founder Tony Fernandes last year.

The airline carried 19 million domestic passengers in 2019, but that figure fell to 6.3 million last year. It carried less than a million passengers between January and October this year, with movement controls tightened to curb the third and fourth waves of coronavirus infections.

Bo also said the airline would reinstate some 300 employees currently on leave to operate domestic flights. Since last year, the airline has downsized its workforce by not renewing contract workers, layoffs and time off.

“We would burn out the employees on leave first, then consider rehiring those we had made redundant as capacity increased,” he said.

Experts say that while the return of interstate travel is undoubtedly a plus for AirAsia and its competitors including Malaysia Airlines, it is far from a panacea.

Brendan Sobie, an independent analyst at Sobie Aviation, believes that domestic passenger traffic could approach pre-pandemic levels by the end of this year, albeit with stiff competition and overcapacity – similar to the situation in the United States. industry before the pandemic – will weigh on continued growth for the carrier.

“Not all airlines in Malaysia were profitable in 2019 and although domestic demand may now recover, many pre-pandemic issues have not been addressed, making it difficult to return to profitability.” , did he declare.

Shukor Yusof, aviation consultant at Endau Analytics, said the increased demand for domestic travel would help AirAsia, although “it won’t be enough to repair its bottom line.”

While Shukor said the resumption of travel to Malaysia is not in itself an indication of a recovery in the airline industry in Southeast Asia, he sees AirAsia as the carrier with the best potential in the long run. post-pandemic growth term.

“This is a critical step as the key tourism countries – Indonesia, Thailand, the Philippines – are still struggling to control the virus and there is little coordination among ASEAN members to find a solution to allow intraregional air travel. “, did he declare.

Malaysian carriers need a resumption of international and domestic travel to heal financially, Sobie said.

“There is now light at the end of the tunnel and the general feeling is more positive but the road to recovery will be long and strewn with twists and turns,” he said. “The darker days should be behind AirAsia, but the outlook remains relatively difficult.”


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