Covid-19 brings Tony Fernandes’s global empire down to earth

Tony Fernandes is one of Asia’s most marketing-savvy entrepreneurs, often drawing comparisons with Richard Branson, the British entrepreneur behind Virgin and his one-time mentor and boss. The Malaysian tycoon bought AirAsia for less than $1 in 2001 and turned it into one of the largest low-cost carriers in the region. But now, Fernandes is facing one of his toughest challenges as the coronavirus pandemic pummels his business. AirAsia X, his long-haul airline, is saddled with Rm63.5b ($15.3b) of debt and earlier this month it unveiled a restructuring plan to cope with “severe liquidity constraints”. AirAsia X’s deputy chairman told local media at the weekend the unit had “run out of money”, adding it was liquidating its Indonesian business and writing down its 49% stake in Thai AirAsia X. The long-haul arm’s share price has plunged 77% this year. AirAsia, the heart of Fernandes’s empire, is facing its own struggles and the airline’s share price has fallen 65% in 2020. The company has pulled out of Japan and its Indian airline, a joint venture with the Tata Group, has come under renewed scrutiny after reports the Malaysian business had stopped funding it. Fernandes denied the claim. The crisis has forced AirAsia to seek financial support from the Malaysian government for the first time. “In 19 years, we’ve never [had] any necessity to ask for a government-backed loan,” Fernandes said. “This is solely out of Covid, where we lost so much of our sales.” Fernandes’s difficulties are indicative of the existential challenge facing the airline sector, with travel restrictions wiping out passenger traffic worldwide.  But some analysts also suggest the group has overstretched, even if a collapse remains unlikely. AirAsia quit Japan months after EY, the group’s auditor, said the pandemic had cast “significant doubt” on the carrier’s ability to continue as a going concern. Story has more.<br/>