This article first appeared in The Edge Malaysia Weekly on December 27, 2021 - January 2, 2022
This year, Malaysia-based airlines joined their international counterparts in executing various debt restructuring measures and fundraising exercises to keep their business afloat as there was no let-up in Covid-19 cases. As they emerge more lean and agile, all eyes are on how they will navigate an industry in which air travel is not expected to fully recover until at least 2024.
Co-founder and group CEO of AirAsia Group Bhd
Love him or hate him, Tan Sri Tony Fernandes did build AirAsia Group Bhd from the ground up so that “everyone can fly”. In the process, he completely disrupted the regional airline industry as his budget carrier went head-to-head with much larger airlines — some with deep pockets and unlimited access to government funds.
Twenty years since the current founders bought into AirAsia, the tenacious will to battle remains strong in Fernandes, who will have to draw on it following the Covid-19 pandemic which pushed AirAsia to negative operating cash flow and negative equity.
Fernandes and his team are doing all they can to put AirAsia back on the flight path, literally and figuratively.
From resolving the group’s liquidity and capital adequacy issues through cash calls, he has pivoted AirAsia into ride hailing, food and grocery delivery, as well as fintech and air cargo.
In October, Fernandes declared that AirAsia Group would no longer be known as just an airline.
“We are now a digital services group. Mark my words: We are going to be a major player in the Asean digital economy,” he remarked, noting that the group’s digital businesses achieved unicorn status in a record time of less than two years.
But the turbulence is far from over.
For the cumulative nine months ended Sept 30, 2021, AirAsia’s revenue fell 65.7% to RM1.02 billion from RM2.97 billion a year ago, while net loss narrowed to RM2.23 billion from RM2.66 billion.
This year was supposed to be a “better” one than the previous as vaccination programmes were ramped up to control the spread of Covid-19, and international borders began to open. But the flight path remains turbulent for global airlines. AirAsia, whose main business remains in aviation, is no exception.
Can Fernandes and his Allstars team fly high again in the new year? Everyone will be watching keenly. — By Joyce Goh
Managing director and group CEO of Malaysia Airlines Bhd and parent Malaysia Aviation Group Bhd
Captain Izham Ismail, who assumed the role of Group CEO in December 2017, was tasked with turning around the loss-making national carrier after it warned as early as March 2020 that travel bans and plummeting demand around the world due to the Covid-19 outbreak had put many global airlines at risk of going bankrupt, including Malaysia Airlines Bhd (MAB).
While MAB didn’t lay workers off during the pandemic, it had joined major international airlines in offering its employees a voluntary unpaid leave programme, as well as a 10% pay cut for senior management as part of measures to lower operational costs.
That, however, was not enough to save the airline from the debilitating impact of the pandemic. In February 2021, Izham led the airline in taking 75 of its creditors to a UK court to restructure RM15 billion of its liabilities, failing which, he warned, the airline was prepared to shut down.
In any event, MAB was one of the earliest Asian airlines to successfully restructure its debt during the ongoing crisis. In fact, it set a new benchmark for airlines undergoing debt restructuring as it completed its own exercise in record time — 4½ months, to be exact, Izham told The Edge in an interview in May.
Still, Izham’s work is far from over. He must now lead the airline’s turnaround under its Long Term Business Plan 2.0, which envisages MAB achieving financial break even by 2023. Its controlling shareholder Khazanah Nasional Bhd is providing immediate cash flow assistance with a RM3.6 billion capital injection to tide it over until 2025.
Izham is aware that all eyes are now on him to pull the airline out of the pandemic. “My aspiration as a CEO [is for MAB to turn around] without drawing down all the RM3.6 billion funding,” he told The Edge. — By Kang Siew Li
Deputy chairman of AirAsia X Bhd
Datuk Lim Kian Onn made headlines this year as he impressively pulled off the unexpected: landing near-unanimous support from creditors of AirAsia X (AAX) for a humongous 99.5% haircut on RM63.5 billion worth of debt.
Many had scoffed at the drastic restructuring terms that Lim and his team mooted in October 2020.
“What choice do we have? We had to give it a shot rather than do nothing and die. There is potential in AAX. It’s just bad timing,” Lim told The Edge end-2020, who prior to the crisis had preferred to stay out of the limelight but was instead thrust into the spotlight last year to lead the budget carrier’s mammoth restructuring.
Slightly over a year after the proposal was mooted, the veteran dealmaker and team landed 99% support from creditors for the debt-restructuring plan, which is unprecedented in global aviation restructuring history.
It was far from smooth sailing, and the skies remain turbulent as the novel coronavirus remains a constant threat.
Against this backdrop but having been given a new lease of life, the now ungeared AAX 2.0 needs to evolve as it makes inroads into the cargo business, Lim acknowledges.
Customers are “very important” to the group, he says, noting that they will get 1:1 travel credits for tickets bought.
“If the airline had gone into liquidation, the passengers would have lost everything. It’s binary,” observes Lim, who believes that “the worst is definitely behind” for the airline. — By Joyce Goh
Executive chairman of WCT Holdings Bhd
Tan Sri Desmond Lim Siew Choon found himself in the limelight after news broke in May that WCT had proposed to enter into a new concession with the government to operate Sultan Abdul Aziz Shah Airport (often called Subang Airport) in Selangor and turn it into a city airport. The low-profile entrepreneur is the chairperson and largest shareholder of the construction and property development group, with a 7.42% direct interest and 18.15% indirect interest as of July 27.
WCT’s proposal is for a 50-year concession with the government to operate the entire Subang Airport area, until 2092, with an option to extend for another 20 years. The reconcession plan would see jets making a return to the airport’s runway and a brand new passenger terminal and an executive jet terminal being built, among others, at a cost of RM3.7 billion over 10 years.
WCT, through its 60%-owned subsidiary Subang Skypark Sdn Bhd (SSSB), had submitted a concept paper to the transport, finance, and energy and natural resources ministries on March 1, triggering a tussle with Malaysia Airport Holdings Bhd (MAHB), which was also planning to redevelop Subang Airport under its RM1.3 billion Subang Airport Regeneration Plan into a leading aerospace and business aviation hub in Asia-Pacific.
Citing documents sighted, The Edge reported that the airport operator stands to lose RM11.9 billion in future revenue if Subang Airport is carved out from its network of 39 airports in the country.
Ironically, SSSB currently operates the SkyPark Terminal (formerly Terminal 3) under a 30-year sublease concession agreement with MAHB, which ends in December 2037, with an option to extend for another 29 years.
WCT’s proposal drew strong protests from the Malaysia Airports Workers Union, which threatened to go on a nationwide strike, prompting the transport and finance ministries to issue separate statements clarifying that no decision had been made by the Cabinet to approve any proposal to sell any part of Subang Airport to the private sector.
As the year comes to a close, the government has yet to approve any of the plans. It remains to be seen whether WCT and MAHB might join hands on the proposed redevelopment of Subang Airport. — By Kang Siew Li
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