Hit By Virus, AirAsia Shares Tumble, Future In "Significant Doubt"

On Monday, AirAsia reported a record quarterly loss of 803 million ringgit ($187 million) for the first three months of the year

Hit By Virus, AirAsia Shares Tumble, Future In 'Significant Doubt'

AirAsia auditor said it's future is in "significant doubt" after reporting huge losses

Low-cost airline AirAsia's future is in "significant doubt" amid the coronavirus pandemic, news agency AFP reported on Wednesday, quoting its auditor. On Monday, the Malaysia-based airline, which operates in India too, reported a record quarterly loss of 803 million ringgit ($187 million) for the first three months of the year, after being forced to ground its fleet due to the virus. Trading in AirAsia's shares was halted on Wednesday morning, and the share prices crashed more than 18 per cent when trading resumed in the afternoon. The shares, however, pared their losses later to trade down about 10 per cent 

Auditor Ernst & Young on Tuesday said, "Travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel, which impacted the group's financial performance and cash flows". It noted the "existence of material uncertainties" and said there is "significant doubt" about the company's ability to continue as a going concern.

Even before Monday's dire results, the airline reportedly had plans to slash hundreds of staff in response to the pandemic, according to AFP.

News agency Reuters reported that the company said last month it was evaluating proposals for raising capital to strengthen its equity base and liquidity. In a note to its clients, brokerage firm Affin Hwang Capital said that an equity-raising through placement or rights issue looks imminent.

The aviation industry is facing its biggest ever crisis due to the pandemic, with airlines worldwide laying off huge number of staff and some have already gone out of business.