KUALA LUMPUR -- Low-cost carrier AirAsia said it has halved its fixed costs and is exploring its options to raise working and operating capital, including selling spare aircraft engines, as the airline continues to struggle because of travel bans imposed in Malaysia, Indonesia and Thailand -- three of its core markets.
The airline's sales fell 86% to 442.9 million ringgit ($108 million) for the third quarter ended Sept. 30, compared with 3.07 billion ringgit in the corresponding quarter last year. Its net loss widened to 851.78 million ringgit from 51.4 million ringgit previously.
The third-quarter performance brings the airline's year-to-date sales down to 2.87 billion ringgit from 9.07 billion ringgit over the same period of the previous year. It has recorded a net loss of 2.66 billion ringgit for the cumulative nine-month period.
Tony Fernandes, AirAsia's co-founder and chief executive officer, said the airline took the decision to sell spare engines in the third quarter and is open "to other potential monetization opportunities where the value and time is right."
"We foresee sufficient liquidity in 2021 with the expectation of upward growth trajectory in air travel demand amid the further formation of travel bubbles and green lanes," he said in a statement on Monday.
AirAsia told the stock exchange that it has applied for bank loans in countries where it operates to shore up liquidity. It is seeking a government-guaranteed loan in Malaysia, while loan applications are under way by the Philippines and Indonesia entities.
"We have also been presented with proposals to raise capital to strengthen our equity base and/or liquidity from a number of investment bankers, lenders as well as potential investors to help the company weather the storm caused by the Covid-19 pandemic."
"In addition, AirAsia has ongoing deliberations with a number of parties for joint-ventures and collaborations that may result in additional third-party investments in specific segments of the group's business," the airline said in its filing.
According to Fernandes, the air travel sector is expected to recover by mid-2021, given that a Covid-19 vaccine would be available for mass deployment by then.
"Despite expecting a capacity drop of 60% in 2020 due to minimum international operations, we are ready to rely purely on the strength of our domestic markets next year," he said, adding that the airline is also working on cutting operating costs and slashed fixed costs by 50% in the third quarter.