AirAsia Japan to be shut down next week?

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AirAsia Japan, one of many subsidiaries of AirAsia, an Asia-Pacific-based low-cost carrier is on the verge of being shut down as the company is strapped for cash.

The announcement to shut down the airline could come as soon as October 5, 2020, reported Asia Nikkei. The Japanese subsidiary of AirAsia already stopped ticket sales, as a combination of demand and international travel restrictions weighted down on it heavily.

Established in 2017, AirAsia Japan never grew into a large-scale airline. In 2019, the low-cost carrier accepted its third aircraft, launched its first international route and its second domestic route. In total, it offered 619,764 seats in the Asian country, flying 485,016 passengers – at an average load factor of 78.2%. The average load factor on AirAsia’s group flights was 85%.

“As a relatively new airline, AirAsia Japan is still building its brand in the country,” concluded the Malaysia-based group on the Japanese subsidiary’s 2019 performance. 

“During the year it conducted an extensive nation-wide campaign in addition to working closely with Chubu Centrair International Airport, the government and business partners to build a homegrown brand that is loved within the local community.” 

In its latest update, AirAsia indicated that the Japanese off-shoot carried 98% fewer passengers and deployed 96% fewer seats on its network in Q2 2020. While the low-cost airline group highlighted that it saw an encouraging pick-up in month-on-month (MoM) numbers, it only outlined the performance of airlines in Malaysia, Thailand, Indonesia, Philippines, and India. The Japanese subsidiary was not highlighted.

In addition, on August 25, 2020, AirAsia announced that it provided financial assistance to the Japanese subsidiary in the form of RM26.8 million ($6.2 million) to “facilitate the running of the operations and financial affairs of AAJ [AirAsia Japan – ed. note].”

In July 2020, the Tony Fernandes-led group was warned by financial auditors that there was an RM1.8 billion ($421 million) difference between the company’s assets and liabilities. AirAsia, meanwhile, sought to raise up to RM1 billion ($234 million) to improve its financial situation.

AirAsia owns a majority stake in AirAsia Japan with 66.9% shares, while the rest of its shares are owned by multiple Japan-based companies. 

 

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