(Updated)

AirAsia books wider-than-expected 4Q net loss of RM2.4b

AirAsia books wider-than-expected 4Q net loss of RM2.4b
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KUALA LUMPUR (March 29): AirAsia Group Bhd posted a bigger-than-expected net loss of RM2.44 billion for the fourth quarter ended Dec 31, 2020 (4QFY20), after the low-cost carrier booked a series of impairments.

Losses per share stood at 73.2 sen, versus 11.5 sen in the fourth quarter ended Dec 31, 2019 (4QFY19).

The impairments incurred include for right-of-use (ROU), receivables, as well as fuel swap losses. On the other hand, the group also booked a gain on disposal of its stake in AirAsia India of RM229.4 million, AirAsia's filing showed.

Excluding the unusual items, AirAsia still booked a loss of RM1.02 billion for the quarter, as opposed to RM851.78 million in 3QFY20, as group revenue fell 39.62% to RM267.44 million, from RM442.91 million, as Malaysia imposed targeted Movement Control Orders in October and November.

Load factor rose slightly on-quarter to 67%, from 66% in 3QFY20.

“It is notable, however, that the Philippines doubled its passengers carried whilst Indonesia multiplied its number of passengers carried by 11 times quarter-on-quarter. This is testament that for areas where travel restrictions are lifted, there is a solid domestic rebound for air travel,” the group said.

The fourth quarter results brought AirAsia’s net loss for the full-year ended Dec 31, 2020 (FY20) to RM5.1 billion or RM1.52 per share – 66% wider than consensus estimate of 92 sen per share, Bloomberg data showed.

Revenue for the year totalled RM3.14 billion, down 73.56% from RM11.86 billion in FY19. In the period, the group saw a 74% decline in number of passengers carried to 13.31 million, from 51.56 million. Load factor was “relatively healthy” at 74%, said the airline, down from 85% the year before.

A major portion of the loss for the period relates to depreciation of ROU and interest on lease liabilities amounting to RM654.2 million for 4QFY20 and RM2.5 billion for FY20, the airline said.

“While the group had successfully negotiated for deferrals with lessors, pursuant to the practical expedient available under Amendments to MFRS16: Covid 19 Related Rent Concessions, the income statement charge for depreciation and interest were not adjusted,” it added.

The group had RM2.12 billion negative net cash flow for the year, as opposed to RM780.3 million in negative net cash flow for FY19.

“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,” AirAsia said of its prospects.

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

The carrier has also set a timeline for its non-airline and digital business to contribute to 50% of the group topline in five years’ time.

Apart from the final stages of discussion for the Danajamin Prihatin Guarantee Scheme for its potential loans with banks, AirAsia said it also has ongoing deliberations with several parties for collaborations “that may result in additional third party investments in specific segments of the group's business”.

The airline’s co-founder and group CEO Tan Sri Tony Fernandes told The Edge in an interview last week that the group was "targeting RM800 million to RM1 billion" in rights issue (read more on the interview in this week's edition of The Edge Malaysia).

In a conference call with analysts this evening, Fernandes affirmed the upcoming rights issue but did not go into the size and specifics, according to analysts who called in.

One analyst opined the cash call could end up being “more than” the company's estimate, following the record losses and depending on how the recovery path pans out. Past analyst estimates ranged from RM1 billion to RM3 billion, prior to AirAsia’s update on its talks with the financial institutions.

With another challenging quarter expected due to the Movement Control Order 2.0 in 1Q21, another analyst pointed to better days in the 2H, “should travel be allowed again”.

“However, they still need to resolve a lot of issues — mainly their negative total equity... and they still need to look at ways to raise funds," he added.

Shares of AirAsia slid one sen or 0.88% to close at RM1.13 today, valuing the low-cost carrier at RM4.31 billion.      

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