AirAsia may ground airline, focus on tech, says Fernandes

By Emmanuel Samarathisa

AIRASIA Group Bhd (AAGB) may be looking to ground its airline business, which makes up about 75% of revenue, in light of the Covid-19 pandemic which has crippled air travel, sources tell FocusM on condition of anonymity.

AAGB founder Tan Sri Tony Fernandes said that the group’s focus “between now and June” was on deferring variable costs and minimising fixed costs. “That may mean we will ground the airline,” he told staff in a briefing today.

Opportunities, said Fernandes, would be found in the logistics and e-commerce sectors. “We will be much more tech-focused,” he said, adding that staff can look to moving into more technical jobs through the group’s in-house reskilling courses under the purview of AAGB president (Redbeat Ventures) Aireen Omar.

But “I’m going to be pushing OURSHOP and Teleport a lot,” added Fernandes. “Home delivery and logistics are going to grow tremendously and we have the right infrastructure. We see great opportunities in logistics and e-commerce.”

OURSHOP is AirAsia’s e-commerce marketplace while Teleport is the group’s logistics arm.

AAGB’s switch to tech marks the struggle aviation players are undergoing due to the coronavirus pandemic. Other local players such as Malaysia Airlines Bhd (MAB) and Malindo Airways Sdn Bhd have also responded to the crisis by meting out a raft of measures from trimming flight routes to slashing salaries across the board.

On Sunday (March 15), airlines representatives from AAGB, Malindo, MAB and MAB subsidiary Firefly met with Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz to discuss financial aid.

During the meeting, the group asked for a loan to help ease liquidity, said Fernandes.

AAGB’s shares opened 7.35% lower at 63 sen after the midday break on March 23.

Earlier, FocusM reported that AAGB may not be able to retain all of its staff. Fernandes said that he couldn’t “guarantee everyone’s jobs. But our No. 1 priority is to make sure we keep as many of you, if not all, in employment.”

Fernandes also mooted the possibility of an AAGB-AirAsia X Bhd merger but didn’t go into detail, as well as a possible 70% capacity cut in India. – March 23, 2020

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