Editor’s note: updated with responses from AirAsia Group CEO Tony Fernandes


Malaysian budget airline AirAsia Group, which has been actively building its super app and digital businesses, has been categorized as a financially distressed company after its request to extend its relief period was denied by the stock exchange.

“As announced by the company on Jan 7, the company continued to trigger the prescribed criteria pursuant to Paragraph 8.04 and Paragraphs 2.1(a) and 2.1(e) of Practice Note 17 (PN17) of the Main listing rules, and an application was submitted to Bursa (Malaysia) for the relief period to be extended beyond Jan 7, 2022, and an appeal following the decision by Bursa for the application.

“The Board of Directors wishes to inform that after due consideration of all facts and circumstances including all written representations and documents submitted before Bursa (Malaysia), Bursa has decided to dismiss the appeal,” AirAsia said in a regulatory filing on Thursday.

AirAsia later confirmed that it is taking all necessary steps to address its PN17 status.

“We are in the midst of formulating a plan to regularise our financial condition and relevant announcements will be made in due course,” AirAsia Group CEO Tony Fernandes said in a statement on Friday.

“PN17 is a reflection of the current state of our balance sheet which has been negatively impacted by the COVID-19 crisis. While we were provided with an 18 month relief period from July 8, 2020, and were subsequently not required to comply with the obligations in the listing requirements, we have undertaken various fundraising exercises to improve our liquidity position. We have also put in place a solid foundation to not only survive but recover from the effects of the pandemic stronger than ever in the near future,” he said.

Fernandes said AirAsia has raised over MYR2.5 billion to date including the Private Placement of MYR336.48 million in the first quarter of 2021. The Renounceable Rights Issue of 7-year Redeemable Convertible Unsecured Islamic Debt Securities (RCUIDS) was completed on Dec 31, 2021, raising another MYR974.51 million for the company.

“Importantly we are not just an airline anymore, solely reliant on airfares. We are an investment company with a portfolio of synergistic travel and lifestyle businesses, all of which are on track to become industry leaders in their respective fields in Asean,” he explained.

“Our robust and diverse company portfolios will allow us to fast-track the regularisation of our financial position, and affirm the strong viability of our business moving forward,” he added.

On the airline, Fernandes said, “While 2021 was the most difficult and disrupted year in the history of commercial aviation I look ahead with greater confidence in 2022. The group has reduced costs significantly and continues to operate with one of the lowest cost bases in the world. Recovery is well underway for the aviation and airline industry. We are continuing to ramp up domestic operations in our core markets in Malaysia, Indonesia, Thailand and the Philippines to near pre-Covid levels on a number of key routes.”

“While there may be some delays for international flights to return to pre-Covid levels due to the fast-spreading Omicron variant, I believe this will be short-lived thanks to accelerated booster shots and the world learning to live with Covid globally. Notwithstanding the new variant, many countries have begun to transition gradually into an endemic phase. I am hopeful that borders will reopen gradually throughout 2022 and we will see a return to normal capacity for our international services by the middle to third quarter of this year.”

AirAsia triggered the financial distress criteria, known as PN17 back in July 2020. This came after its external auditor flagged significant uncertainties that cast doubt on its ability to continue as a going concern.

The Malaysian stock exchange has given AirAsia 18 months to address the issues in view of the COVID-19 pandemic. Listed companies that are classified as PN17 will be required to submit a regularization plan within 12 months or risk being delisted from the stock exchange, according to the regulations.

AirAsia has been aggressively building its digital businesses and its ASEAN Super App over the last two years as most of its planes were grounded due to the ongoing COVID-19 pandemic. It has introduced ride-hailing services, food delivery, beauty e-commerce, among others. Its FinTech unit, BigPay, has also submitted its application to secure a digital banking license in Malaysia last year.

The group has hoped to build its super app, modeling regional tech giants such as Grab’s and Gojek’s super apps which offer a variety of services including ride-hailing, food delivery, and payment services.

On Monday, the company has announced it has secured its Certificate of Approval (COA) from the Civil Aviation Authority of Malaysia (CAAM), to conduct remote drone pilot training. AirAsia said the latest development supports the upcoming drone pilot project for the delivery of goods from AirAsia’s e-commerce platforms, using automated drones.

AirAsia posted a net loss of MYR887 million ($212.32 million) in the third quarter of 2021, from MYR851.78 million ($203.88 million) a year ago, as the impact of the Covid-19 pandemic continues to affect the group’s operations adversely. The group said the net loss was also due to its investment in technology, talent, and network as it continues to scale up its Super App and air cargo unit Teleport.

Quarterly revenue declined 36.9 percent to MYR295.89 million from MYR468.94 million a year earlier.

For the nine months ended Sept 30, 2021, AirAsia’s net loss narrowed to MYR2.23 billion from MYR2.66 billion in the same period in 2020. Revenue fell to MYR1.02 billion from MYR2.97 billion.