AirAsia in trading halt after auditor flags 'going concern' doubts

Sepang

Shares in Malaysia’s AirAsia Group Bhd were halted on Wednesday after its auditor said there were material uncertainties that cast doubt on the budget carrier’s ability to continue as a going concern. In an unqualified audit opinion on the airline’s earnings results for 2019, Ernst & Young PLT said the financial statements were prepared on a going concern basis, which is dependent upon a recovery from the COVID-19 pandemic and the success of fundraising efforts, according to Reuters.

In response, the airline said in a statement that Malaysia’s stock exchange had granted it 12 months relief from being classified as a financially distressed firm - a classification that would require it to submit a business improvement plan.

Malaysia has also extended the relief to other companies who may face a hit to business from the pandemic. Like airlines around the world, AirAsia has been hit hard by the coronavirus which has decimated travel demand. It posted a first-quarter loss of 803.3 million ringgit ($188 million), its biggest loss for the quarter since its listing in November 2004. The company said last month it was evaluating proposals for raising capital to strengthen its equity base and liquidity.