AirAsia in trading halt after auditor flags ‘going concern’ doubts

FILE PHOTO: A Thai Air Asia Airbus A320-200 plane prepares for take off at Don Mueang International Airport in Bangkok, Thailand, June 29, 2016. REUTERS/Chaiwat Subprasom/File Photo

Shares in Malaysia’s AirAsia Group Bhd were halted on Wednesday after its auditor said there were material uncertainties that cast doubt on the budget carrier’s ability to continue as a going concern.

In an unqualified audit opinion on the airline’s earnings results for 2019, Ernst & Young PLT said the financial statements were prepared on a going concern basis, which is dependent upon recovery from the COVID-19 pandemic and the success of fundraising efforts.

In response, the airline said in a statement that Malaysia’s stock exchange had granted it 12 months relief from being classified as a financially distressed firm – a classification that would require it to submit a business improvement plan.

Malaysia has also extended the relief to other companies who may face a hit to business from the pandemic.

Like airlines around the world, AirAsia has been hit hard by the coronavirus which has decimated travel demand. It posted a first-quarter loss of 803.3 million ringgit ($188 million), its biggest loss for the quarter since its listing in November 2004.

The company said last month it was evaluating proposals for raising capital to strengthen its equity base and liquidity.

AirAsia management has guided that an equity raising via a placement or rights issue looks imminent, Affin Hwang Capital analyst Isaac Chow wrote in a note to clients on Tuesday.

AirAsia did not comment on the fundraising efforts.

The trading halt is due to be lifted from 2.30 p.m. local time (0630 GMT) on Wednesday, a release to the exchange said.

Finance Minister Tengku Zafrul Aziz told Reuters in June that the ministry had not provided financial aid to any of the country’s airlines and that the airlines have said they “can do okay, on their own.”

AirAsia said on Monday there were ongoing deliberations for joint ventures and collaborations that might result in additional third-party investments in specific segments of the group’s business.

It has also sought payment deferrals from suppliers and lenders and halted all deliveries of Airbus SE  jets this year as it seeks to cut costs.

AirAsia‘s shares have halved in value so far this year, giving it a market capitalisation of around $670 million.

Elsewhere in the region, Thai Airways International PCL and Virgin Australia Holdings Ltd have entered bankruptcy protection due to their inability to pay creditors.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.