AirAsia has dismissed rumours of a Malaysian government bailout and possible collapse, saying its refinancing remains on track, while Thai AirAsia expects to maintain its position as the largest player in the domestic market.
Tony Fernandes, founder of and advisor to AirAsia, said the airline has no plans to request government support and has never received any since it started 25 years ago. Mr Fernandes is chief executive of Capital A, the holding company of AirAsia.
A plan to access US$1billion will refinance outstanding loans from the pandemic and should be completed by November or December this year, but it is not to raise new capital, he said.
The group is focusing on optimising operations, cutting roughly 60 loss-making routes and reducing costs through returning less fuel-efficient aircraft.
The emphasis is on strengthening Southeast Asian routes as well as flights to major Asian markets, backtracking from an earlier plan to become a global low-cost network, said Mr Fernandes.
“We’re definitely going back to our roots in Asia without killing our ambitions,” he said.
The long-haul route expansion will rely on code-share partnerships instead of operating solely, said Mr Fernandes.
The group does not plan to lay off employees or implement furloughs, as occurred during the pandemic, he noted.
Tassapon Bijleveld, executive chairman of SET-listed Asia Aviation, the operator of Thai AirAsia, said the airline still has sufficient cash flow of 1 billion baht.
However, the airline is unlikely to make a profit this year due to a massive loss in the second quarter, he noted. The airline expects to return to profit in the fourth quarter, banking on robust high-season demand.
“Typically, during the fourth and first quarters people are still willing to spend for travel, regardless of fuel price,” said Mr Tassapon. “We are doing our best to maintain customer market share.”
As of August, Thai AirAsia commanded the largest market share at 26%, and a domestic flight market share of 39%.
The airline aims to operate 55 planes from its fleet of 62, after dipping to less than 50 in the third quarter.
He said the airline does not plan to hedge jet fuel due to soaring prices at the moment.
Phairat Pornpathananangoon, chief executive of Thai AirAsia, said after reducing some unprofitable overseas flights, the airline will be able to relocate jets to serve domestic flights, such as resuming routes from Suvarnabhumi airport to Chiang Mai, Phuket and Krabi.
The company wants to increase the average domestic airfare to around 2,000 baht by year-end in order to match surging jet fuel prices, he said.
THAI AIRASIA X
Mr Tassapon said the rehabilitation plan for Thai AirAsia X was adjusted in response to surging operational costs related to jet fuel prices. While the plan still has two years remaining, the airline filed a request with the Central Bankruptcy Court last month for a suspension of debt repayment for two years.
“We need to maintain sufficient cash flow given this immediate problem,” he said.
If the energy crisis improves next year, the airline might be able to repay debts before two years, said Mr Tassapon. Thai AirAsia X has seven A330 aircraft and already cancelled flights to China and Australia, aiming to strengthen traffic via potential routes to Japan, Kazakhstan and India.