Air Asia shares tumble due to flight cancellations, financial position

Shares of low-cost carrier Asia Aviation (AAV) tumbled almost 6 per cent on Tuesday after cancellation of domestic flights and the airline’s fragile financial position.

AAV share price declined by 5.97 per cent to 2.52 baht by midday. Another airline Bangkok Airways (BA) also fell by 4.67 per cent to 10.20 baht.

The airline said it had to seek emergency borrowing to make sure it can pay its employees this month amid flight suspension, while the government has not provided any assistance for the ailing aviation industry.

Following the partial lockdown announcement, the airline was the first to halt all domestic routes from July 12 due to insufficient demand.

Tassapon Bijleveld, executive chairman of Asia Aviation (AAV), the parent company of Thai AirAsia, said “the government never responded to our demands for soft loans requested since the first lockdown last year.”

The current restriction on domestic flights has worsened the situation, Tassapon added.

At present, the carrier is under business restructuring with a 3.5-billion-baht loan issued by new investors.

But the process has been delayed due to further negotiations with regulators, according to the company.

The ban on domestic flights has led to a 70-per-cent decline on flight and passenger numbers, according to local media reports.

Suvarnabhumi Airport earlier was seeing around 97 flights per day with more than 6,500 passengers before the current restrictions.

As of mid-July, the airport has only 25 flights per day and around 3,900 passengers.

The Airlines Association of Thailand, which comprises seven airlines, said it will gather and call for urgent assistance action from the government this week as the aviation industry is one of the hardest hit.

“The government may not be able to reach tax collection objectives since many large taxpayers are losing their financial position,” Tassapon warned.

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