All it takes for AirAsia to fly again is the first dose of COVID-19 vaccine

FINALLY, after a long, long time, AirAsia is getting back to it old self.

No, this is not about paddling beauty items, financial products or the Harumanis mangoes but pure flying as what the aviation business is all about.

Its takes the first COVID-19 jab for group CEO Tan Sri Tony Fernandes to reaffirm his confidence of a strong comeback for AirAsia and for airlines the world over this year on the back of robust pent up demand for travel.

“Vaccines being rolled out and strong demand will fuel a V-shaped recovery in coming months,” he pointed out.

“According to IATA (International Air Transport Association), there will be a rapid recovery in domestic air travel set to be above 2019 by 2022 with Asia Pacific leading the way.”

A recent report by Rothschild and Co has concluded that travel sentiment is improving on vaccine efforts and combined with pent up demand, will fuel a strong rebound in key domestic markets in Asia-Pacific by 2H 2021.

It highlights that web traffic for major airlines and broader travel websites indicate a surge in web traffic for regions with high vaccination rates.

“In Malaysia, although we are seeing a new wave, we see this as short-term pain for long-term gain.

“Although Asean countries are already in early stages of vaccination, authorities in many country are committed to meeting their targets of inoculating the majority of their citizens by year-end.

“Travel bubbles will also support a fast rebound in the travel industry as countries deliver high vaccination rates and gain control of the virus. Global infectious disease experts are even predicting coronavirus may be treated as a simple cold in the future.”

Exiting failed ventures

Fernandes also explained that AirAsia has used the downtime in flying as an opportunity to further reduce its cost structure by focusing on strict cost containment including exiting loss making ventures such as AirAsia Japan and reducing its investment in AirAsia India to focus on Asean where its brand and foothold is strongest.

“As an airline, I’m confident AirAsia will recover faster than many of our competitors as more than 50% of our business is domestic leisure which is going to pick up before regional or business travel,” he envisages.

“Low-cost domestic short-haul will likely rebound by 3Q 2021 and international could reach pre-COVID-19 levels by end-2022. With the increased introduction and adoption of a digital travel passport and vaccine passport, travel will also be made easier and safer amid the current situation.”

As a company, Fernandes said AirAsia used the grounding of its 245 planes to strategise and diversify its business by really putting its foot on the accelerator to fast track its digital businesses that began well before COVID-19.

“We now have two key businesses – the airline and digital – whereby digital e-commerce and logistics are the way forward.

“We already have 17 travel, lifestyle and fintech products on our super app, offering people value and choices on what to eat, shop, where to fly, stay and much more at the lowest prices all from the convenience of the mobile app.

“Underpinned by strong data, network and technology, our non-airline businesses are already making money and I believe they will overtake airline revenues in the next few years.”

Flying again

Moving forward, Fernandes said AirAsia already has its own version of digital passport with Scan2Fly where guests can scan any required medical documentation and have it verified in real time before heading to the airport.

In the coming months, the budget carrier will launch facial recognition technologies at its key airports.

On the funding front, AirAsia has completed two tranches of our private placement exercise raising RM336 mil which form part of our overall plans to raise between RM2.0 bil to RM2.5 bil.

Last month, AirAsia Thailand announced a corporate and capital restructuring scheme entailing fresh capital of up to 5.9 bil baht.  

“In times of crisis, only the strong survive. We have faced so many crises in the past and have always evolved stronger. This is no different. AirAsia will emerge from this pandemic stronger than ever,” enthused Fernandes. “The best part of this story is yet to come.”

At 2.47pm, AirAsia was down 0.5 sen or 0.6% to 83 sen with 6.6 million shares traded, thus valuing the company at RM3.16 bil. – May 11, 2021

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