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AirAsia’s wings may be clipped permanently

Jack Burton

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AirAsia’s wings may be clipped permanently | Thaiger
PHOTO: The Jakarta Post

Malaysia’s budget airline AirAsia could become the next casualty of the Covid19 pandemic, which has grounded fleets around the world and already forced the demise of NokScoot, another regional budget carrier. AirAsia’s auditor is warning that the airline’s future is in “significant doubt” due to the collapse in demand for air travel caused by the coronavirus and regional governments closing borders.

The aviation industry is facing its biggest-ever crisis worldwide due to the outbreak, with many airlines laying off vast swathes of staff and some already out of business.

Not so long ago AirAsia shook up south east Asian budget air travel with its slogan “Now everyone can fly.” On Monday the company reported a record quarterly loss of 803 million ringgit (5.9 billion baht). Auditor Ernst & Young said Tuesday that “travel and border restrictions implemented by countries around the world have led to a significant fall in demand for air travel, which impacted the group’s financial performance and cash flows.”

In an unqualified audit opinion statement to the Kuala Lumpur stock exchange, the accountancy firm noted the “existence of material uncertainties that may cast significant doubt on the group’s and the company’s ability to continue as a going concern.”

Trading in AirAsia’s shares was halted this morning but resumed in the afternoon. AirAsia Group shares slumped nearly 18% when trading resumed following the suspension. The budget airline pared its loss down to 12% as of 3:40pm local time. Trading was halted Wednesday until 2:30pm local time.

AirAsia’s CEO Tony Fernandes said on Monday…. “This is by far the biggest challenge we have faced since we began in 2001.” He says the carrier is in talks for joint ventures and collaborations that could result in additional investment, and it has applied for bank loans and is weighing other proposals to raise capital.

Last month, South Korean conglomerate SK Group announced it was reviewing a proposal to buy a small stake in the airline. In May, AirAsia sent a memo to Malaysian banks seeking to borrow 1 billion ringgit, (7.3 billion baht) according to people familiar with the matter.

AirAsia said in an exchange filing Wednesday that Ernst & Young’s statement and a decline in shareholder equity triggered the criteria for a so-called Practice Note 17, which applies to financially distressed companies. But the airline won’t be classified as PN17, as the Malaysian exchange suspended application of the status from April through June next year as part of relief measures in light of the coronavirus pandemic.

AirAsia needs at least 2 billion ringgit this year to stay afloat, according to an aviation analyst at UOB Kay Hianin Singapore.

“There’s not a lot of options, and the best one could be the government stepping in but seeking a rights offering by the company in exchange.”

Despite the warnings, there are signs of improvement with the gradual lifting of restrictions on interstate travel and domestic tourism activities in the countries where AirAsia and its units operate.

SOURCE: Bangkok Post

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4 Comments

4 Comments

  1. Avatar

    Alex

    Wednesday, July 8, 2020 at 5:17 pm

    Awful! It just goes to show that the cure is worse then the disease!

  2. Avatar

    Toby Andrews

    Wednesday, July 8, 2020 at 11:13 pm

    I have flown them two times, however if foreigners are kept out of Thailand, and cannot buy tickets, Thais will not sustain this airline.
    Pity, the airline is good.

  3. Avatar

    Thomas Foo

    Thursday, July 9, 2020 at 10:18 am

    I had used the airlines quite often and found it to be ideal for budget old fellow like me to travel and visit places.
    It is indeed very sad if the airline go bankrupt due to corvid 19 and not mismanagement.

  4. Avatar

    Govindasamy Teyagarajan

    Thursday, July 9, 2020 at 11:42 am

    Airasia is full of nonsense n bullshit. I hv booked two flyt from thm. One they hv transfer to credit account. Another of my refund, after almost four month of delay they also transfer to credit account instead of my original mode of booking. Idiot

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Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

Economy

2 emergency decrees provide businesses financial help

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2 emergency decrees provide businesses financial help | Thaiger
PHOTO: 2 Decrees aim for financial relief for struggling businesses

Thailand enacted 2 new emergency decrees today aimed at providing assistance to businesses and reducing default interest rates to help people affected by Covid-19. A deputy government spokeswoman confirmed the needed action was critical to protect and aid entrepreneurs and small and medium-sized enterprises during the time of pandemic-driven economic crisis.

The goal was to combat unfair interest rates on debt many are suffering, and to provide loans to help keep businesses afloat as the end of the Coronavirus is nowhere in sight.

The Emergency Decree on the Provision of Financial Assistance for Entrepreneurs Affected By the Covid-19 Pandemic allocates 250 billion baht in loans for businesses to recover from the devastating economic effects of the global pandemic. 100 billion baht of this is specifically set aside for those businesses in debt to participate in asset warehousing or debt repurchasing plans.

Asset warehousing allows businesses, like hotels, to essentially store their property in the care of a creditor for a fee until the economy recovers enough to take over the property again and start making money with it again. Debt repurchasing is a process for a business to buy back its own debt with better terms or a lower rate with the purchase price considered a payment to the principal debt not the interest, similar to refinancing a home.

The second of the emergency decrees, an amendment to the Civil and Commercial Code, looks to close loopholes caused by ambiguity in the law that allowed predatory creditors to charge unreasonable interest rates.

If someone missed a loan payment, the original law did not set a default rate, so lenders could charge additional interest. Debtors can now base default rate calculations on the unpaid principal in the updated law. The new decree sets a 3% yearly interest rate and lowers the default rate to 5% a year from the originally 7.5%. The Finance Ministry declared interest rates would be revised every 3 years.

SOURCE: Bangkok Post

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Pattaya

Unemployed elephants walk 500 kilometres from Pattaya to Surin

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Unemployed elephants walk 500 kilometres from Pattaya to Surin | Thaiger
PHOTO: Elephants walking down the road because their car is in the shop.

A group of 5 elephants and their owners began the long walk today from Pattaya to Surin after giving up on the return of tourism anytime soon. The 500 kilometre journey has to be done on foot as they couldn’t afford to hire trucks large enough to carry each elephant.

After waiting a year for the Chinese tourists that make up a majority of their customer base to return, the families decided to embark on the long journey with the 5 elephants to their home in the northeastern province of Surin. As they walk they’re protected on both sides by pickup trucks to keep them safe from cars.

5 years ago Napalai Mai-ngam came with her relatives to work in an elephant resort in Tambon Lam Huay Yai of Bang Lamung near Pattaya with their 5 elephants. They told the Bangkok Post that their earned a good living, about 75,000 baht (15,000 per elephant) plus tips from the tourists to ride elephants on nature trails, each month.

But with the borders closed due to the Covid-19 pandemic the tourists from China who usually flocked to elephant activities, were stuck back in China and Napalai’s boss had to cut their pay. Even with vaccinations finally underway, tourists in numbers, enough to sustain activities like elephant camps, may not be back anytime soon. The families finally had to surrender to the reality and start the long walk home.

They avoid the blistering Thai sun by walking early mornings while the weather was still cool, and hope the roadways out of Pattaya would provide snacking opportunities for the elephants to graze. They expect the journey to take about 2 weeks. The families have turned down offers of cash donations for fear that their long walk will be viewed as a publicity stunt.

That said, the families have expressed gratitude to the locals in towns they pass who have donated drinking water, food and fruit to the entourage of people and elephants. If you would like to donate resources you can contact them on phone number 093 335 7062.

SOURCE: Bangkok Post

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Economy

Southern Thai people turn from tourism to gold panning

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Southern Thai people turn from tourism to gold panning | Thaiger
PHOTO: Traditional panning for gold replaces tourism for income in Southern Thailand

Thars gold in dem hills!

With tourism in Thailand struggling due to Covid-19, and an economy needing some help, some people in the southern Thai region of the country have found income in an unusual source: panning for gold. The Sukhirin region close to the Malaysian border is known for gold deposits in the Sai Buri River and surrounding mountains. Villagers who made money before with tourism have now returned to panning for gold using old-fashioned manual techniques their ancestors used, without the aid of any machinery. Well, just an old pan.

Locals had previously made money selling food to passing tourists or acting as a tour guide to take people around the area, where travellers seeking to get away from the crowded and overdeveloped tourist areas that attract the most foreigners find many unique activities. Kayaking was a popular local activity with up to 150 people a day sailing down the rivers that are now filled with locals panning for gold. The prospectors are now making their income from the gold they collect which sells for 1,500 baht per gram. Families that work together can often collect at least one gram a day.

Thai Gold prices have reached record highs over the last 2 years and many Thai people have traditionally used gold and gold jewellery as a form of savings and investment, pawning their gold rings and bracelets in times of financial emergencies. The gold collected from these Southern villages will be used to make jewellery in Bangkok.

The region had invested in expanding into ecotourism but the pandemic put all their construction plans on hold. A cable car was being built to transport people up to the tops of the mountains to beautiful temples. The area’s unique history attracted people to their annual Rocket Festival, typically a north-eastern celebration.

In 1932, France was granted a 25 year mining contract in the jungles. They extracted almost 2000 kg of gold before World War II forced closure. The mining tunnels still exist and sometimes attracted adventurous tourists, but now sit vacant aside from snakes. In the 1960s the Thai government incentivised northerners with 18 rai of land each to move to the region. As a result, the area stands out in the Muslim region with 90% of the population being Buddhist, and most still speaking Isan dialects.

SOURCE: France 24

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