AirAsia X (D7, Kuala Lumpur International) has joined the growing ranks of airlines whose financial futures have been called into question by auditors after EY warned on the LCC's going concern status.
EY auditors noted in a note that AirAsia X's liabilities exceeded its assets by MYR1.1 billion ringgits (USD260 million) at the end of 2019. This deficit was higher than for the entire AirAsia Group, whose liabilies exceeded its assets by MYR1.08 billion (USD256 million).
EY underlined that the airline faced additional problems in 2020 due to the pandemic. However, they also said that the validity of the going concern status was highly dependent on the airline's ability to obtain deferrals of payments, particularly to lessors, maintenance providers, and financial institutions. The auditors also noted that the airline was planning to restructure its fleet and network, and was also in the process of applying for an important state-backed loan of up to MYR500 million (USD118 million).
In its financial statements for the first quarter of 2020, AirAsia X said it lost MYR157.7 million (USD37.4 million) on a consolidated basis between January and March 2020. It said that the whole group would remain in hibernation for now with "no clear visibility on the timing of recovery at this point in time".
AirAsia X had planned to restart its first post-pandemic route, from Kuala Lumpur International to Taipei Taoyuan, on August 1, although nothing has happened thus far. According to the ch-aviation schedules module, the airline currently hopes to resume this route on a sustained basis on August 29, 2020, although the schedule is subject to change.
AirAsia X also said it was negotiating return of aircraft with lessors, without providing any specific numbers, as well as lease rates on the non-returned aircraft.
Malaysian financial analysts at CGS-CIMB Research said the carrier is unlikely to survive unless it gets a financial injection.
