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AirAsia’s future in ‘significant doubt’, warns auditor

written by Sandy Milne | July 9, 2020

Air-to-air shot of a A320neo in AirAsia livery (AirAsia)

AirAsia Group shares tumbled 18 per cent on Wednesday, after an audit report released by consulting firm Ernst & Young (EY) expressed “significant doubt” over the airline’s stability.

The news comes just days after the Malaysian LCC posted a staggering quarterly loss of US$188.4 million – covering the months leading up to initial suspension of services in late March.

While both reports indicated that the company has been hard-hit by a slump in air travel demand and continuing travel restrictions, the auditor’s report went so far as to suggest the “existence of material uncertainties that may cast significant doubt on the group’s and the company’s ability to continue as a going concern”.

Released to the Kuala Lumpur Stock Exchange late on Tuesday night, the unqualified audit opinion statement held that AirAsia’s liabilities already exceeded its assets by US$430 million at the end of 2019, a year when the airline posted a US$66.39 million net loss.

However, the report also acknowledged a recent uptick in flight frequency and load factors, which it put down to the “progressive lifting of restrictions on interstate travel and domestic tourism activities within the operating countries”.

Market regulator Bursa Malaysia put a temporary freeze on trading until 2:30pm Wednesday (local time), after which Group shares went into freefall.

On Thursday, AirAsia publicly responded to the EY report, assuring shareholders that “the board of directors is confident of the successful continuation of the business”.


It also pointed out that with domestic travel now permitted in Malaysia, Thailand, Indonesia, India and the Philippines, it has resumed operations in these countries on a “staggered yet steady” basis since late May.

AirAsia Group CEO Tony Fernandez called the coronavirus crisis “the biggest challenge we have faced since we began in 2001”.

“We are positive in the strides we have made in bringing cash expenses down by at least 50 per cent this year, and this will make us even stronger as the leading low-cost carrier in the region,” he added.


AirAsia has said that it is currently in talks over joint ventures that may help shore up the airline’s liquidity. Bloomberg reports that the group is also exploring avenues for sourcing additional capital, including taking out private bank loans.

AirAsia’s future in ‘significant doubt’, warns auditor Comment

  • Air Asia is a budget carrier. There are many same that will either go or survive. Pax expect unrealistic low fares. They have no idea of costs involved. I.E a A380 not Air Asia fuel alone on full ammounts to $250.000 Aud.
    Pax must be aware and are the first to complain. Other costs are enourmous i.e cost of aircraft, landing and slot fees etc. The costs go on .

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