AirAsia: Flight Demand Remains Strong Amid Uncertainty
AirAsia Group’s seat load factor was in the range of 80 per cent during the third quarter. Furthermore, ticket bookings for the fourth quarter are also showing a very positive trend.
Jakarta (ANTARA) - AirAsia co-founder Tony Fernandes stated that flight demand remains strong amidst global uncertainty influenced by geopolitical tensions and the rising price of aviation fuel (avtur).
In an online media briefing held in Jakarta on Friday, Fernandes conveyed that the load factor for AirAsia Group was around 80 per cent in the third quarter. Additionally, ticket bookings for the fourth quarter are also showing a very good trend.
According to him, this condition demonstrates the difference in the current aviation industry situation compared to the COVID-19 pandemic, when airlines and passengers faced travel restrictions, preventing flights from operating normally.
“COVID-19 exerted much heavier pressure on the aviation industry compared to the conditions faced today,” he said.
He noted that the public is still able to undertake air travel, ensuring that flight demand remains steady, even though the industry faces various uncertainties.
Fernandes stated that current aviation fuel costs are within a range that AirAsia can manage. He expects aircraft fuel prices to be in the range of 160-190 US dollars and stated that the company could readjust ticket prices should fuel costs increase significantly.
He assessed that the public’s ability to continue travelling by air is a crucial factor in maintaining current demand, despite the industry facing various uncertainties, including geopolitical conflicts.
He explained that the second quarter was the most difficult period for the airline, which controls approximately 60 per cent of the Malaysian domestic market. He predicts that conditions will improve as AirAsia takes steps to adjust fares to anticipate rising fuel costs.
On the other hand, Fernandes emphasised that AirAsia possesses strong cash management capabilities and a robust liquidity position.
Regarding liabilities, AirAsia’s total obligations reached 18.4 billion ringgit, or approximately Rp81.4 trillion, as of 30 June 2024, with around 13 billion ringgit, or Rp56.5 trillion, of that amount being aircraft lease obligations.
Fernandes’ statements were made in response to media reports regarding the Malaysian Government’s move to contact Malaysia Airlines and Batik Air to devise contingency scenarios should AirAsia’s financial condition worsen, including the possibility of taking over the low-cost carrier’s routes and passengers.
Fernandes asserted that AirAsia is not requesting a government bailout. He also ensured that no aircraft have been grounded due to defaults on payments.
According to him, the 1 billion US dollar fundraising effort undertaken by the company is purely a refinancing effort to reduce interest costs and improve financing tenures, rather than an attempt to raise new capital.