Malaysia's AirAsia shares slide after record quarterly loss

KUALA LUMPUR (Reuters) - Shares in AirAsia Group Bhd fell in morning trade on Tuesday, as analysts lowered earnings forecasts after the Malaysian budget airline group posted its record quarterly loss.

FILE PHOTO: Airasia planes are seen parked at Kuala Lumpur International Airport 2, amid the coronavirus disease (COVID-19) outbreak in Sepang, Malaysia October 6, 2020. REUTERS/Lim Huey Teng

The stock fell as much as 6.2% in the first half session of trade.

Affin Hwang Capital cut earnings forecasts for 2021 and 2022, expecting a larger net loss this year due to lockdowns in Malaysia in the first quarter, closed borders and longer-than-expected timeframe for the COVID-19 immunisation programme.

“We now anticipate AirAsia to report net loss of 92 million ringgit in 2022 due to slower-than-expected recovery in international tourism,” analyst Isaac Chow said in his note.

AirAsia in a results presentation on its website said it expects a soft first quarter for its Malaysia unit due to lockdowns, but the following quarter could see up to 33% of pre-COVID domestic levels following relaxation on some cross-state tourism.

AmInvestment Bank said in its note that it was highly critical for AirAsia to shore up its liquidity quickly given its cash burn rate.

The research house said while prospects for the air travel industry and airlines have improved, AirAsia may need to raise more fresh capital, “including potentially a debt-to-equity swap for creditors (that is also highly dilutive to its existing shareholders) to ensure its long-term survival.”

In its presentation, AirAsia said it reduced its average cash burn by 92% in the last quarter of 2020, partly due to continued support from lessors and banks for deferrals.

The airline said ongoing discussions for raising new capital in Indonesia and Philippines were also positive.

AirAsia reported a record $591 million quarterly loss on Monday.

AirAsia has been looking to raise up to 2.5 billion ringgit to weather the pandemic, and said that it expects to secure 1 billion ringgit in loans from three Malaysian banks.

Reporting by Liz Lee; Editing by Shailesh Kuber