AirAsia’s external auditor raises material uncertainty relating to going concern

AirAsia’s external auditor raises material uncertainty relating to going concern (The Edge photo)

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KUALA LUMPUR (July 7): AirAsia Group Bhd’s external auditor has issued an unqualified audit opinion on the material uncertainty relating to the group’s going concern, in view of the current economic condition and Covid-19 pandemic.

Ernst & Young PLT, in a report filed with Bursa Malaysia by AirAsia, noted that the budget carrier posted a net loss of RM283 million for the year ended Dec 31, 2019 (FY19) and that its current liabilities exceeded its current assets by RM1.84 billion.

“Further, in early 2020, the global economy, in particular the commercial airlines industry, faces uncertainty as a result of the unprecedented Covid-19 pandemic.

“The travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel which impacted the group’s financial performance and cash flows,” said the auditor.

These events or conditions, the auditors said, indicate 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, said Ernst & Young.

However, it did note that with the recent progressive uplifting of restriction on interstate travel and domestic tourism activities within the operating countries, AirAsia has seen positive developments on its business operations as passenger seat booking trends, flight frequencies and load factors are gradually improving to cater for the increasing demand.

The auditor added that the financial statements of the group and the company have been prepared on a going concern basis, and its validity will depend on factors such as a successful recovery of the pandemic, and a favourable outcome of the group’s discussions with financial institutions to obtain required funding for its future plans.

Yesterday, AirAsia posted a net loss of RM803.85 million for 1QFY20, against a net profit of RM96.09 million in the same period last year. Revenue declined 15.3% to RM2.31 billion from RM2.73 billion.

Shares of AirAsia closed four sen or 4.47% lower at 86 sen today for a market capitalisation of RM2.86 billion.

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