Asia Aviation Plc. (“AAV”), major shareholder of Thai AirAsia Co. Ltd. (“TAA”) today announced its operating results for the first quarter of 2020, achieving a total revenue of Baht 9,399 million, down 19% year on year (“YoY”) with a net loss of Baht 671 million. TAA carried a total of 4.5 million passengers during the period, down 23% YoY with a load factor of 84% due to travel restrictions and reduced demand in light of the COVID-19 situation.
The airline has adapted its networks and capacity to more efficiently match travel demand, reducing flight frequencies and canceling routes to at-risk countries. The adjustments decreased its Available Seat Kilometres (ASK) by 30% from last year to 4,834 million.
CEO of Asia Aviation Plc. and Thai AirAsia Co. Ltd., Santisuk Klongchaiya pointed out that the entire service industry, including AirAsia, was impacted by the COVID-19 outbreak during the latter end of this year’s first quarter, which depressed travel demand and prompted many countries to impose travel restrictions. In compliance with instructions from the Civil Aviation Authority of Thailand (CAAT), TAA temporarily suspended its international flights between 22 March and 31 May 2020 while domestic flights were suspended between 1 and 30 April 2020.
TAA resumed domestic operations for several major routes on 1 May 2020 on the back of regulatory easing measures and an improved situation of Covid-19 in Thailand. Services which have resumed are in with CAAT health standards and strict safety oversight. The initial resumption has been for necessary travel, including for business, work and passengers returning home, rather than for tourism. International flights are expected to resume in the near future once border restrictions are lifted.
The company has adjusted its business plans to adapt to the current changing situation, especially in terms of managing and containing costs. We have restructured a portion of the fuel hedges with our supportive counterparties and are still in the process of restructuring the remaining exposure to reduce the hedging losses if fuel price remains at current prices. Top executives and senior employees are volunteering a salary sacrifice, while a reserve capital is being sought through soft loans from the government, which are currently being reviewed.
The company is also revisiting and reviewing its future investment plans while all significant capital expenditures will be suspended or delayed. New aircraft acquisitions may be suspended this year to maintain a fleet appropriate to the current circumstances.
“We are working hard to manage our capital in spite of this crisis, but we are not stagnating. We are using this opportunity to improve our passenger service, especially in terms of security and hygiene, and introducing innovations to reduce physical contact. Innovative revenue sources are also being created like AirAsia Delivery, a home delivery service for our most popular Santan menu items. These are the opportunities we have identified in this crisis and we are confident that we will emerge from the situation stronger than before,” Santisuk assured.
For the year 2020 as a whole, TAA will reduce its passenger target to 11 Million or down 51% YoY, while aiming for a load factor of 80 percent, down 5 percentage points. The company will continue to closely monitor and evaluate the situation, especially in the latter half of the year when measures and regulations on travel are likely to ease, and regional travel is expected to return. With the Chinese market expected to recover in the near future and given Thailand remains the number one destination for Chinese travellers, the company will ensure that it is ready to seize this as soon as possible.