Air Asia optimistic about recovery from Covid-19 pandemic in 2021

Air Asia remains optimistic about recovery from Covid-19 pandemic in 2021 even if the resurgence in cases further hurts the airline industry.

Chief Executive Tony Fernandes said AirAsia, one of the top budget airlines in Asia, expressed his confidence that Air Asia will experience recovery in term of profits next year.

That target “sounds incredibly bullish, but I’ve been through many, many crises before,” Fernandes said during an interview on CNBC’s “Street Signs Asia.”

Asian authorities have become “much, much smarter” in how they many further outbreaks of the coronavirus, Fernandes said. He said that will allow the region’s aviation industry to recuperate in a “much more sustainable” way.

“I think that’s giving me a lot of confidence in some of my bullish statements,” he noted.

The measures placed to curb the spread of the virus were border closures and movement restrictions, and these slowed down or put air travel to a halt. Globally, airlines worldwide were struggled financially, with many having to slash their workforce and resort to government aid to remain operating.

AirAsia, one of the top budget airlines in Asia, reported a net loss of 188.4 million in the quarter ended March 30.

Impact on the industry

The financial impact of the coronavirus pandemic on the airlines industry has been felt by airline companies.

The airline industry may lose $84 billion in 2020, according to the International Air Transport Association (IATA). Air travel dropped by 98% in April from last year.

The agency previously predicted 8.2 billion air travelers in 2037. However, the efforts made to curb the spread of the coronavirus badly hit air travel.

“We think airlines are going to probably lose an unprecedented $84 billion in 2020,” Brian Pearce, chief economist for IATA, told CNBC.

“We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasma bubble between Australia and New Zealand, China and Singapore, as well as China and Korea.”

Despite the situation, Pearce believes a recovery can happen in the second half of 2020.

US airlines

Meanwhile, US airlines will be allowed to resume limited flights to China. The Chinese government welcomes more flights by US carriers.

American airlines will follow a limited schedule of flights to China after an agreement between the two countries eased their travel standoff.

United Airlines (UAL), American Airlines (AAL), and Delta Air Lines (DAL), the three largest airlines in the US, had flights to China before the coronavirus pandemic. However, the demand shrank when the coronavirus outbreak happened. The airlines eventually postponed their flights in February when the US government implemented travel restrictions.
Meanwhile, four Chinese carriers provided services throughout the pandemic at a reduced schedule. They are allowed one weekly flight each between the US and China.
However, the US Department of Transportation reported that Chinese government regulations blocked Delta and United when the US airlines asked for the resumption of flights on June 1.