Malaysian brokerage issues dire warning about AirAsia X

Malaysian brokerage firm CGS CIMB Securities has questioned the ability of AirAsia X to survive the collapse in international air travel. In a research note entitled “Low probability of survival,” CGS CIMB says that the long-haul, low-cost carrier’s first quarter results were just the “opening scene for the horror movie of the year.” The carrier released its Q1 results last week, recording an operating loss of MYR158m ($37.3m), widening from MYR29.5m a year earlier. “[Air Asia X] is currently negotiating with suppliers to reduce aircraft lease rates and to pay on a per-use basis, to early-return leased aircraft that is in excess of future requirements, to reduce airport charges, to revisit terms with business partners, and to restructure its fuel hedges with the remaining 30% of counterparties that have yet to agree to defer payments,” says CGS CIMB. It adds that the airline, which operates only international services, has been particularly hard hit by Malaysia’s Movement Control Order, which has all but cut Malaysia off from the world since March. “Domestic air travel is recovering within Malaysia, but as [AirAsia X] is a long-haul airline, it will have to wait a lot longer for international borders to reopen.”<br/>