Southeast Asia carriers struggle as global travel recovers unevenly

The earnings of international airline operators reflect the uneven recovery from the pandemic as they struggle with debt taken on to weather last year's plunge in passenger traffic. While carriers based in the US, where vaccinations have progressed, bottom out, Southeast Asian airlines continue to face headwinds. AirAsia Group's operations will take about two years to normalize, CEO Tony Fernandes indicated during the Southeast Asian discount carrier's January-March earnings release. Coronavirus infections remain high in AirAsia's service area, including its home base of Malaysia, where a nationwide lockdown started on June 1. The company last month reported a net loss of 767m ringgit ($186.7m), bringing its capital ratio below zero and falling into negative net worth. Singapore Airlines reported a record net loss of 4.27b Singapore dollars ($3.2b) for the year ended March 2021. THAI went into a reorganization last year, with liabilities exceeding assets by 129b baht ($4.1b) at year-end. Airlines shoulder high-fixed costs, including labor and plane leases. When the pandemic halted or greatly curtailed business, they borrowed heavily to secure an operating cushion. Interest-bearing debt at 20 major airlines reached $285b as of the March-end, growing 40% from a year earlier. The 20 carriers posted losses as they borrowed to pad reserves, reducing their collective capital ratio from 18% to 10%. The cash drain in the airline industry is likely to continue. The IATA projects that global carriers will burn through $81b in cash this year, compared with $149b in 2020. <br/>