Tony Fernandes, Group Chief Executive Officer of AirAsia Bhd., Speaks during a Bloomberg Television interview on the sidelines of the Bloomberg New Economy Forum in Singapore on Wednesday November 7, 2018.
Wei Leng Tay | Bloomberg via Getty Images
SINGAPORE – The outlook for the global aviation industry is improving as more countries roll out mass vaccination programs against Covid-19, AirAsia chief Tony Fernandes said Tuesday.
Fernandes said AirAsia, one of Asia’s top low-cost airlines, is expected to return to “a large part” of its routes by the end of 2021, but passenger capacity is not expected to return to pre-coronavirus pandemic levels until 2023.
“It was the biggest challenge,” he told CNBC’s “Squawk Box Asia” as part of the network’s coverage of the Davos agenda. “But I think the prospects are getting better.”
“The most important thing is that there is a lot of demand out there and we just have to wait for the borders to open. I think we are one of the first types of companies that will bounce back from an airline perspective because we do are.” very strong in national and regional, “he said.
The coronavirus pandemic has crippled the global travel and tourism sector. It has put many airlines in survival mode as they take mass layoffs, cancel orders, retire some of their existing fleets, and cut routes.
The International Air Transport Association (IATA) announced in December Airlines will suffer a net loss of $ 118.5 billion through 2020 and an expected net loss of $ 38.7 billion in 2021.
AirAsia is fighting too. In November, the company reported a fifth straight quarter loss between July and September and is in the process of raising funds through loans and investors. Fernandes said the company plans to raise up to 2.5 billion Malaysian ringgits ($ 618 million) for the entire group. That includes AirAsia’s digital business and logistics unit, which Fernandes says are both performing well.
“We are a bit behind schedule than we wanted, but the amount is exactly where we want to be. We are very confident that this capital that we will raise will take us well into 2023 “He said, adding that the company will emerge with a better cost structure, strong digital business and good demand for the airline.
AirAsia shares are down nearly 22% so far this year.
Fernandes also said AirAsia is in talks with Airbus and that the airline’s long-term order book remains intact. “We have to postpone part of it to a later date,” he said, adding, “We don’t want to change that for short-term decisions.”
AirAsia has been one of Airbus’ largest customers since the airline switched from Boeing years ago. Reuters reported that AirAsia has since ordered a total of more than 660 Airbus jets, including aircraft that have yet to be delivered.
Change the landscape
The CEO said the competitive landscape for airlines has changed due to the pandemic. Some airlines have either reduced capacity or left the market altogether. AirAsia’s cost-cutting measures are expected to improve the company’s margins, he said.
Low-cost airlines that fly shorter routes and sell on-demand services are expected to recover faster than airlines that fly to intercontinental destinations and rely on first- and business-class travel, according to Fernandes.
He said business trips will take longer to recover as more people choose to hold business meetings virtually. “Time is a great healer. At some point, business travel will return, but there will be an element that says, ‘Well, I can do it with Zoom,” added Fernandes.