AirAsia India is expected to let go of several of its employees as its part-owner, AirAsiaBerhad struggles to maintain its group operations across regions following the outbreak of coronavirus.
AirAsia Berhad is set to reduce up to 30 percent of its workforce across regions including its Indian operations which it part-owns with Tata Sons as the group struggles to maintain its operations following the Covid-19 outbreak.
Sources in the airline said that apart from salary reduction up to 75 percent, the group is seriously considering plans to let go between 25 percent and 30 percent of its entire workforce of about 20,000 across regions.
An AirAsia India spokesperson, however, declined to comment on the possible measures being taken to retrench employees. As of December 2019, AirAsia India had a market share of 7 percent. It has a total fleet size of 30 aircraft and flies to 21 destinations across India.
The airline sector is one of the most-affected industries since the outbreak of coronavirus across the countries. According to the airline consultancy firm CAPA, most airlines in the world could file for bankruptcy soon. “As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.”
As far as the airlines operating in India are concerned, CAPA said they are expected to incur a total loss of $3.6 billion during the first quarter of the current financial year. Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full, it said.
Surprisingly, AirAsia India recently received its board’s clearance for increasing its borrowing limit by ₹1,000 crore to ensure it continues to pay leasing and parking charges for its grounded aircraft. AirAsia India is learned to be the first domestic airline to formally increase the borrowing limit. The decision to increase the limit from ₹500 crore to ₹1,500 crore was taken at a meeting of the shareholders in April.
AirAsia India is a joint venture between Tata Sons, which owns 51 percent in the airline, and AirAsia Berhad. The special resolution was approved to carry out “existing and future financial requirements to support its business operations”
AirAsia India, which has been struggling since it began its operations in June 2014, recorded a fourth-quarter net loss of ₹123.3 crore in FY19, which was 26 percent lesser than the same quarter in the previous year. It recorded revenues of ₹1,057.6 crore, a 65 percent increase from Q4 of FY18 on the back of a 38 percent increase in capacity, and a 19 percent increase in average fare.