AirAsia’s future in doubt.
AirAsia Group shares were temporarily suspended on Wednesday after the company’s external auditor said it had “significant doubt” over the budget carrier’s ability to operate amid the pandemic.
Ernst & Young highlighted AirAsia’s huge debts in a statement to the Kuala Lumpur stock exchange prompting panic among shareholders.
The auditor said it has found “material uncertainties” that may cast “significant doubt” on the carrier’s ability to continue to operate.
“We draw attention to Note 2.1 and Note 48 to the financial statements, which indicate that the group has a net loss of 283 million ringgit ($66.2 million) for the financial year ended 31 December 2019 and the current liabilities exceeded its current assets by 1,843 million Ringgit,” Ernst & Young’s report says.
“The travel and border restrictions implemented by countries around the world have led to a significant fall in demand for air travel which impacted the Group’s financial performance and cash flows.”
After the trading suspension was lifted, AirAsia Group’s share price fell by 18%.
“This is by far the biggest challenge we have faced since we began in 2001,” AirAsia’s Chief Executive Officer Tony Fernandes said in a statement earlier this week.
“Every crisis is an obstacle to overcome, and we have restructured the group into a leaner and tighter ship.”
According to reports, the airline is in talks for joint-ventures and collaborations that may result in additional investment.
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