AirAsia: Auditors Say that Uncertainties Cast Doubt on Their Ability to Continue as a Going Concern

The Malaysian low cost carrier AirAsia has been flagged with worries over whether it can continue as a “going concern.”

The auditing firm Ernst and Young have issued their audit of the airline’s 2019 earnings with a warning that continued success is dependent upon a recovery from the COVID-19 pandemic and the success of their fundraising efforts.  The report explains that current conditions “indicate existence of material uncertainties that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern.”

It was reported last month that the AirAsia Group was ¨evaluating proposals to strengthen its equity base and liquidity through a capital raising exercise, as it works to overcome challenges caused by the coronavirus pandemic.¨

This does not mean that AirAsia is going bankrupt.  The airline has been in talks to secure additional funding.  AirAsia has reported that that ¨some financial institutions had indicated they would support a funding request.¨ But it does mean that the ASA community should take the same prudent steps to protect their interests that they would take with any air carrier that represents a known risk.