AirAsia expects measures put in place to result in 30% cost reduction

Budget airline, AirAsia has resumed its scheduled domestic flights today in Malaysia. Flights in Thailand and Indonesia will resume on May 1 and May 7 respectively, while domestic flights in Philippines will resume on May 16.

In a press release sent out today, the airlines highlighted that strict health controls and social distancing protocal are in place.

The resumption of services will initially be for selected domestic routes, which will gradually seen an increase to include international destinations around the region, once the situation in the region improve.

Executive chairman of AirAsia Group, Kamarudin Meranun said,“Flexibility remains the key to our business model. Our strong foundation coupled with robust relationships with suppliers and partners have enabled us to return to service stronger amid these unprecedented challenging times.

The airline has also stated that no new aircraft deliveries will be taken on as the target to end the year is with 242 aircraft, a net reduction of one aircraft from last year.

“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 added.

AirAsia has also restructured a major portion of the fuel hedges with 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,” Kamaruddin said.

AirAsia also expects initiatives put in place to result in at least a 30 percent cost reduction YoY in 2020.

 

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