AirAsia in Thailand suffers heavy losses

BANGKOK, 17 August 2021: Asia Aviation Plc, the major shareholder in Thai AirAsia, posted a net loss of THB1,692 million during the second quarter of 2021, compared to a net loss of THB1,141 million in the same period last year.

Results for the first half of 2021 (1H2021) saw AAV post a THB2,431 million in revenue and a net loss of THB3,556 million.

The public listed company reported results, 14 August, showing revenue of THB1,081 million for the second quarter of 2021. Poor results were blamed on the resurgence of the Covid-19 pandemic in Thailand. TAA recorded 721,794 passengers, up 155% due to increased travel demand during the Songkran festival in mid-April. Comparisons are made with Q2 2020 when passenger traffic plummeted due to fleet hibernation. Consequently, the load factor in Q2 2021 stood at 61% compared with 52% during the second quarter of 2020.

Asia Aviation Plc. and Thai AirAsia CEO, Santisuk Klongchaiya, acknowledged that AAV’s second-quarter results “remained subdued” due to external factors such as a more severe domestic Covid-19 outbreaks in Thailand than expected. He pointed out that AAV and TAA have reviewed every aspect of the operations and have taken appropriate courses of action, including strict cost management and have also sought out new sources of funds. This includes a corporate and capital restructuring plan and a request for soft loans to maintain employment from the government, which have yet to be concluded.

“A new wave of Covid-19 infections erupted in April 2021, with new variants also emerging, clearly impacted our operations in May and June … the airline scaled back flights to ensure proper liquidity and to secure both short-term and long-term performance,” Santisuk said.

Sale and service revenues increased Year-on-Year (“YoY”) due to a low base from the fleet hibernation in April 2020. Freight increased by 682% YoY on the back of 132 cargo flights in 2Q/2021. Meanwhile, the operating costs declined by 20% YoY mainly from a reduction in staff cost.

Half-year performance

Results for the first half of 2021 (1H2021) saw AAV achieve THB2,431 million in revenue but suffered a net loss of THB3,556 million. The Covid-19 pandemic lockdown forced the airline to suspend all international routes, decreasing revenue 75% YoY from a 65% drop in passengers and a 26% drop in average fare. Operating costs dropped by 49% YoY in part from employees’ pay cuts and furlough and related expenses due to fewer flights compared to the previous year.

Looking forward

Looking at the second half, July to December 2021, the airline noted that in July, Thailand started pilot schemes to reopen tourism in Phuket and Samui in South Thailand to vaccinated travellers without quarantine. However, the Covid-19 situation in the country has deteriorated and suffered from a slow national vaccination rollout. In addition, the Civil Aviation Authority of Thailand issued an announcement prohibiting airlines from flying passengers in/out of the maximum control zone. TAA responded by suspending all scheduled domestic flight operations from early July to the end of August.

Commenting on the outlook, Santisuk said: “The most important task for the latter half of the year will be maintaining fiscal discipline and supporting liquidity.  We will continually be assessing risk, but we believe that our short-term policies will soften the blow of external factors. Acknowledging that there is no replacement for travel, we can only encourage everyone at this time to take care of themselves and assure that when the opportunity returns and demand for travel begins to rise, Thai AirAsia will be ready to return to robust growth.”