AirAsia to see 30% reduction in costs for 2020

29 Apr 2020 / 14:38 H.

PETALING JAYA: AirAsia Group Bhd expects to see cost reductions of at least 30% this year, following several initiatives it has implemented to carry it through the current challenging operating environment.

In a statement, executive chaiman Datuk Kamarudin Meranun said flexibility remains the key to the group’s business model.

“We do not intend to take any new aircraft deliveries this year with the target to end 2020 with 242 aircraft, a net reduction of one aircraft from last year.

“We are relooking at our orderbook with Airbus. The decision to sell and lease our aircraft in late 2018, has provided us greater flexibility to scale back growth than owning aircraft today. We were also able to lock in the best price for those aircraft at prime market conditions while eliminating the residual risk of owning aircraft,” he said.

He added that AirAsia has also restructured a major portion of the fuel hedges with supportive counterparties and are still in process of restructuring the remaining exposure.

“This will help deal with the excess of hedged volume against expected fuel consumption post-Covid-19 and reduce the hedging losses if fuel price remains at today’s prices.

“Further measures in managing and containing cost include both the management and senior employees of AirAsia Group volunteering a salary sacrifice, re-negotiating contracts and deferring all non-essential expenditures,” he said.

Meanwhile, the group has also resumed its Malaysian operations today, which will be followed by hailand (May 1), the Philippines (May 16), and Indonesia (May 7), subject to approval from the authorities.

The resumption of services will initially be for key selected domestic routes, which will increase gradually to include international destinations around the region, once the situation improves and governments lift borders and travel restrictions.

Kamarudin said AirAsia is working actively with all relevant regulators, local governments, civil aviation and health authorities, and will adhere to guidance from the World Health Organisation (WHO) and International Civil Aviation Organisation (ICAO) to ensure the highest standards of compliance and conformance are in place for every single flight.

Additionally, he said the diversification of the group’s revenue base will continue, with a more rigorous and market-friendly approach to further expand digital and ancillary businesses such as Santan, Teleport and BigPay.

“AirAsia also participated in a number of recovery flights initiated by governments and private companies during the period, providing a boost to its charter service.

“To help as many local businesses as possible, we have launched the Save Our Shops (S.O.S) campaign by allowing them onboard our e-commerce platform OURSHOP with last-mile delivery by Teleport. AirAsia Foundation also launched an e-pay donation drive in collaboration with BigPay,” he said.

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