Can AirAsia and Malaysia Airlines stay aloft amid the coronavirus pandemic? Only with major restructuring, experts say

With airlines in Malaysia expected to take three years to recover from the Covid-19 pandemic, observers say a major restructuring has to be on the cards for key airlines including embattled national carrier Malaysia Airlines and AirAsia, the market leader by fleet size. Transport Minister Wee Ka Siong this month said the Malaysian Aviation Commission’s revised projections for passenger traffic in 2020 came in at 26.6m, plummeting more than 75% from the 109.2m passengers recorded last year. “Airlines are expected to need a period of three years to fully recover the situation from the impact of the Covid-19 epidemic, subject to the outbreak in the country and abroad,” he said in a parliamentary response. AirAsia’s strategy so far has been a combination of lay-offs, diversification and scrambling for loans. The low-cost carrier last month confirmed it was retrenching about 2,400 employees and seeking up to 2.5b ringgit (US$606m) in funding to tide it over, including 1.5b ringgit in bank loans. The future for Malaysia Airlines, however, is less clear. The carrier has a fraught history, and is now grappling with 16b ringgit in liabilities, poor international perceptions following two aviation tragedies in 2014 and multiple changes in top management. The airline, which is currently negotiating with creditors, is also offering early retirement to its employees. “With a crisis of this magnitude, no one comes out of it the same,” said transport analyst Mohshin Aziz, who manages Pangolin Investment Management’s new aviation recovery fund. Story has more.<br/>