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Covid-19: AirAsia resumes flights, to cut costs and remain positive

TheMole
Written by TheMole

KUALA LUMPUR, April 30 2020: AirAsia has resumed its scheduled domestic flights in Malaysia yesterday and will start flying to selected international destinations soon subject to the approval of the authorities.

The airline’s planned flight resumptions include Thailand on May 1, the Philippines on May 16 and Indonesia on May 7.

AirAsia, however, is looking to cut cost aggressively and not taking delivery of any aircraft this year in an effort to cushion the impact of the Covid-19 crisis.

Executive chairman Datuk Kamarudin Meranun said AirAsia expected its initiatives on bringing down its cost of operations would result in the company saving 30 per cent of its cost this year.

Among the cost-cutting measures are plans not to take any new aircraft deliveries this year and its target is to end 2020 with 242 aircraft.

“This is a net reduction of one aircraft from last year. We are (also) relooking at our orderbook with Airbus, ” Kamarudin said in a statement.

He said the decision to sell and lease AirAsia’s aircraft in late 2018 has provided the airline greater flexibility to scale back growth than owning aircraft now.

“We were also able to lock in the best price for those aircraft at prime market conditions while eliminating the residual risk of owning aircraft,” he added.

Kamarudin said the company has also restructured a major portion of fuel hedges with its supportive counterparties and is in the process of restructuring the remaining exposure.

“This will help deal with the excess of hedged volume against expected fuel consumption post- Covid-19 and reduce the hedging losses if fuel price remains at today’s prices.

“Further measures in managing and containing costs include both the management and senior employees of the AirAsia Group volunteering a salary sacrifice, re-negotiating contracts and deferring all non-essential expenditures, ” he said.

The airline’s statement today stressed that all AirAsia flights will adhere to strict health controls and social distancing protocol are in place, in compliance with the regulations.

It pointed that the resumption of services will initially be for key selected domestic routes, which will increase gradually to include international destinations around the region once the situation improves and governments lift borders and travel restrictions.

Kamarudin said the company’s strong foundation, coupled with robust relationships with suppliers and partners, have enabled it to return to service stronger.

“AirAsia works actively with all relevant regulators, local governments, civil aviation and health authorities, and adheres to guidance from the World Health Organisation and International Civil Aviation Organisation to ensure the highest standards of compliance and conformance are in place for every flight we operate in our network, ” he said.

“We will require guests to wear masks and practise universally recommended protective precautionary measures including social distancing and observing high personal hygiene. All our aircraft, which are fitted with hospital-standard High Efficiency Particulate Air filters, will also be sent for a thorough disinfection every night stop, ” he added.

AirAsia had participated in a number of recovery flights initiated by governments and private companies during the outbreak period, which provided a boost to its charter service.

“Despite the unprecedented environment we are currently in, we are continuing to build on our strengths and especially our brand so as to emerge stronger when normalcy returns,” said Kamarudin.

He added that AirAsia hopes to continue to sustain the about 1.3 million jobs linked to it in the region and double its economic contribution to Asean’s GDP from US$15.3bil in 2018 to US$35bil in 2030.

AirAsia’s statement also said the airline would continue with the diversification of its revenue base with a more rigorous and market-friendly approach to further expand its digital and ancillary businesses such as Santan, Teleport and BigPay.

Teleport is prioritising the transport of medical supplies to frontliners and emergency medical responders and have been operating a number of chartered flights, especially for cargo shipment.

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