AirAsia announces an up to 75% cut on staff’s salary due to COVID-19

AirAsia Group (KLSE:AIRASIA) is the latest from the global airline industry that has outlined its strategy to cut costs amidst the ongoing Coronavirus pandemic that has brought air travel to a near halt. In a statement on Saturday, AirAsia’s Chief Executive Officer highlighted that the group’s founders have agreed to not taking their salaries to maintain the financial stature of the company. AirAsia’s staff also approved an up to 75% cut on monthly salaries.

AirAsia’s Staff Agrees To A 15%-75% Cut On Salary

CEO Tony Fernandes highlighted in his post on Instagram that he and AirAsia’s Executive Chairman Kamrudin Meranun have suspended their salaries for as long as the pandemic is brought under control. Depending on seniority, he added, the company’s staff has agreed to a cut of 15% to 75% on their monthly salaries. The move, as per Fernandes, is aimed at cushioning the economic blow from COVID-19.

Fernandes also accentuated in his statement on Saturday that Malaysia’s low-cost airline currently lacks an incoming revenue. AirAsia Group has also grounded 96% of its fleet as the health crisis weighed heavily on demand. According to Fernandes:

“We still have significant ongoing financial commitments such as fuel suppliers and leasing agents.”

AirAsia, however, has so far not cut jobs or furloughed its employees due to the pandemic like many other players of the global airline industry.

Previously, customers of the Malaysian airline were requested to accept credit offers instead of refunds for canceled flights.  

AirAsia Suspended Flights In March

The flu-like virus has so far infected more than 4,600 people in Malaysia and has caused 76 deaths. As the number of confirmed cases started to increase in March, AirAsia resorted to suspending the majority of its flights. AirAsia X(long-haul arm) currently has its fleet parked at Kuala Lumpur hub. As per the airline, its fleet is expected to resume operations after May 31^st.

AirAsia Group closed the last week at 13 pence per share in the stock market that translated to around 60% decline in 2020 so far. On March 19^th, the stock dropped to as low as 9 pence per share.

Its struggle in the stock market, however, started before the outbreak with the budget airline posting an annual loss of around 40% in 2019. At the time of writing, AirAsia Group has a market cap of £450 million.