PAA In Race For Capital Infusion

As AirAsia Reports Local unit lost ₱2.3B

17 September 2020


The Kuala Lumpur-based low-cost airline said its Philippine AirAsia unit will be availing the loan accommodations provided by the Philippine government under the Bayanihan Act II. 

AirAsia Berhad said it has applied for bank loans in its operating markets, and that the regional low-cost carrier has been presented with proposals from investment bankers, lenders and potential investors to raise capital.

The airline group is seeking to raise as much as 2.5 billion ringgit ($600 million) by the end of the year as it tries to survive a business slump exacerbated by the coronavirus pandemic.

The group said Philippine AirAsia unit lost ₱2.3 billion in the second quarter of the year, wiping out the ₱1.87-billion profit the local carrier posted last year.

Majority stockholder Michael Romero said that after last year's reorganization, the airline was seeking to raise around $200 million this year or in early 2021, and that it had already tapped Citibank and BDO Capital as financial advisors for the planned initial public offering of Philippine AirAsia.

Romero said the plan will have to wait as his airline is “in active engagement” with its creditors to reschedule payments and reduce costs as well as to renegotiate terms of contracts as it tries to survive the pandemic.

The airline said the number of passengers it carried fell 99 percent in the second quarter from a year ago due to the travel restrictions brought about by the COVID-19 pandemic.

PAA said passenger volume reached only 29,111 in the April to June period, down from 2.22 million passengers it flew in the same period last year.

The airline hibernated its fleet from March 20 to June 4 because of the COVID-19 outbreak.  Load factor fell by 36 percentage points to 55 percent from 91 percent.

“For the fourth quarter this year, AirAsia Philippines is targeting a recovery of domestic capacity up to 60 percent of pre-Covid-19 levels,” the company said.

Air Asia resumed limited domestic and international commercial flight schedules after Metro Manila reverted to the general community quarantine.