The future of Malaysian budget airline, AirAsia (KLSE:AIRASIA), is in ‘significant doubt‘ according to auditing firm Ernst & Young.
Prior to the challenges posed by Coronavirus, the company’s liabilities already exceeded its current assets by 1.84 billion ringgit (£340 million).
With tight travel restrictions and grounded flights, AirAsia cash flow and balance sheet have been hit even further. After suspending all flights in late March, the company booked a record quarterly profit of 804 million ringgit, almost £150 million.
In its statement to the Kuala Lumpur exchange on Tuesday, Ernst & Young stated that the AirAsia financial position “[indicates] existence of material uncertainties that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern,”
The company said that it was in talks to enter into joint ventures which may lead to additional investment. It was also applying for bank loans and considering other proposals for raising additional capital.
AirAsia is owned by tycoon Tony Fernandes, who also owns QPR football club. In a statement, Mr Fernandes said:
“This is by far the biggest challenge we have faced since we began in 2001,”
“Every crisis is an obstacle to overcome, and we have restructured the group into a leaner and tighter ship.”
“We are positive in the strides we have made in bringing cash expenses down by at least 50% this year, and this will make us even stronger as the leading low-cost carrier in the region,” he added.