Trading of AirAsia’s shares suspended after auditor E&Y brings up concern

Bursa Malaysia has suspended the public trading for low-cost carrier AirAsia Group Berhad. — Reuters pic
Bursa Malaysia has suspended the public trading for low-cost carrier AirAsia Group Berhad. — Reuters pic

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KUALA LUMPUR, July 8 — The public trading for low-cost carrier AirAsia Group Berhad has been suspended by Bursa Malaysia, after its external auditor issued an unqualified opinion on its ability to continue and its related material uncertainty.

The auditor, Ernst & Young PLT (E&Y), said in a statement yesterday that the group has a net loss of RM283 million for the financial year which ended on December 31, 2019, and its current liabilities exceeded its current assets by RM1.84 billion.

“Further, in early 2020, the global economy, in particular the commercial airlines industry, faces uncertainty as a result of the unprecedented Covid-19 pandemic. The travel and border restrictions implemented by countries around the world has led to a significant fall in demand for air travel which impacted the group’s financial performance and cash flows,” it said.

E&Y said the combination of these circumstances is indicative of the existence of material uncertainties which may cast significant doubt on the group and the company's ability to continue as a going concern.

“Nevertheless, with the recent progressive uplifting of restriction on interstate travel and domestic tourism activities within the operating countries, the group has seen positive developments on its business operations as passenger seat booking trends, flight frequencies and load factors are gradually improving to cater for the increasing demand.

“The financial statements of the group and the company have been prepared on a going concern basis, the validity of which is dependent on successful recovery from the Covid-19 pandemic in conjunction with the actions undertaken by the government of the respective countries,” it said.

E&Y added this will also depend on the favorable outcome of the ongoing discussions with the financial institutions and investors to obtain required funding and successful implementation of the management’s plans for future actions.

Earlier this week, AirAsia Group Bhd recorded a net loss of RM803.85 million for the first quarter ended March 31, 2020, compared with a net profit of RM96.09 million in the same period last year.

In a statement, the budget airline said despite kick-starting the year with a strong performance in January 2020, the uncertainty of the Covid-19 outbreak as well as increasing travel restrictions and border controls due to the pandemic had led to weaker air travel demand in February and March.

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