AirAsia Asserts Financial Strength Amid Oil Cost Surge
AirAsia maintains strong liquidity despite soaring fuel costs, with the group planning to raise $1 billion to refinance debt while preparing for robust fourth-quarter travel demand. Thai AirAsia will deploy all 63 aircraft by November as th
The AirAsia group has reaffirmed its financial strength, emphasizing cost management and cash flow amid rising fuel expenses. Thai AirAsia confirms robust liquidity and is preparing for the high season.
On September 18, Tony Fernandes, AirAsia Group co-founder and adviser, stated that AirAsia maintains strong liquidity and cash management despite significant operational impacts from rising fuel costs. He confirmed the airline is not in negotiations with the Malaysian government regarding financial assistance. Currently, the company holds over 1 billion ringgit in cash and plans to raise 1 billion US dollars to refinance existing high-interest debt, with several banks showing interest. Clarity is expected between December 2024 and January 2025.
Fernandes emphasized the airline can continue operations and manage higher fuel costs through fare adjustments reflecting real costs, restructuring flight routes by eliminating unprofitable ones, and deploying AI technology to reduce costs and enhance revenue generation, maintaining tight cash flow and cash management.
In the first eight months of 2024, the airline carried 43 million passengers cumulatively and targets over 60 million for the full year. The airline expects strong fourth-quarter performance as flight operations normalize further, with travel demand showing no significant signs of slowdown. Third-quarter passenger load factor reached approximately 80%, while advance bookings remain strong, indicating consumers continue traveling despite higher fares and travel costs.
"Air travel demand remains robust despite the aviation industry facing pressure from rising jet fuel costs due to geopolitical tensions. Business continues normally with strong travel demand, unlike the COVID-19 period when flights halted, causing severe damage to the aviation industry," Fernandes said.
Regarding the Thai market, he noted strength and robust travel demand will support performance despite fuel costs and currency volatility remaining short-term pressures. Indonesia and the Philippines represent high-potential markets experiencing growth.
Thassapon Baeleweld, Thai AirAsia chairman, stated Thai AirAsia's status remains unchanged with no impact. The airline maintains adequate cash flow and liquidity from advance ticket sales during the high season in quarters four and one. He confirmed passengers who purchased quarter-four and quarter-one tickets will travel with zero flight cancellations.
"Fourth-quarter trends are expected to return to profit from recovered tourism during high season, though oil prices must be monitored. However, this cannot offset losses from quarters two and three, so the airline cannot return to profit this year, similar to other airlines facing increased fuel cost burdens," Baeleweld said.
Baeleweld added that Thai AirAsia will have all 63 aircraft operational by November from the current 55 in use to accommodate the high season.
