dolution

Low-cost Southeast Asian carrier founded by Malaysian tycoon Tony Fernandes, AirAsia attributed the loss to “collapsed demand for air travel” in February and March 2020 due to the coronavirus pandemic. Capacity reductions were mainly from Malaysia and the Philippines as domestic routes and international routes were halted mid-March. The COVID-19 crisis has resulted in border closures in most of AirAsia’s key markets including Malaysia, Thailand, Indonesia, the Philippines, China, and India, resulting in a 22% reduction in total passengers carried in the first quarter to 9.85 million. AirAsia said it remains confident that it has enough working capital for the rest of the year despite operating at only 50% capacity. “We are gradually adding frequencies and opening routes in the domestic sector, with the advice and regulations from government and health authorities. The airline is also looking forward to the gradual reopening of international borders, recognizing that air transport provides the connectivity that is essential for the resumption of economic activities. Steps were currently being taken to sustain working capital including seeking payment deferrals from suppliers and lenders, restructuring of a major portion of its fuel hedges, as well as salary “sacrifice and re-negotiating of contracts” for management and senior employees. AirAsia has ongoing deliberations with a number of parties for joint-ventures and collaborations that may result in additional third-party investments in specific segments of the group’s business. (Source: Nikkei Asia, 2020) Based on above case study, answer the following questions: