* Airline posted $188 mln Q1 loss, biggest since listing
* Firm has said it is evaluating capital raising proposals
* Equity raising via placement or rights issue seen imminent
(Updates share price movement, adds milestone)
By A. Ananthalakshmi and Anshuman Daga
KUALA LUMPUR/SINGAPORE July 8 (Reuters) - Shares in
Malaysia's AirAsia Group Bhd AIRA.KL tumbled more than 17% on
Wednesday in their biggest daily fall after the auditor cast
doubt on the budget carrier's ability to continue as a going
concern due to the coronavirus travel slump.
Auditors EY issued an audit opinion stating the airline's
2019 earnings were prepared on a going concern basis, which is
dependent upon a recovery from the COVID-19 pandemic and the
success of fundraising efforts.
AirAsia said in response 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.
Other firms hit by the pandemic have received similar
relief.
"EY is waving a red flag, which signals to investors and
creditors serious risks to AirAsia if the current crisis doesn't
end soon or if the airline doesn't get a cash injection," said
Shukor Yusof, head of aviation consultancy Endau Analytics.
Shares in AirAsia, one of Asia's biggest budget carriers,
have plunged 58% this year, giving it a market value of about
$550 million. Shares in its long-haul arm, AirAsia X Bhd
AIRX.KL , fell 5% on Wednesday.
Like other airlines, AirAsia has been hit hard as the
coronavirus hammers travel demand. It posted a first-quarter
loss of 803 million ringgit ($188 million), its biggest loss for
the quarter since its 2004 listing. AirAsia said last month it was evaluating capital-raising
proposals to strengthen its equity base. AirAsia management has given guidance that an equity raising
via a placement or rights issue looks imminent, Affin Hwang
Capital analyst Isaac Chow wrote in a report on Tuesday.
AirAsia did not comment on its fundraising efforts.
The airline's liabilities exceeded its assets by 1.84
billion ringgit at the end of 2019, Ernst & Young said in its
unqualified opinion. An unqualified opinion indicates the
auditor believes a company has prepared its statements fairly.
AirAsia said on Monday joint ventures and collaborations
were being considered that might result in additional
third-party investments in specific segments of its business.
It has also sought payment deferrals from suppliers and
lenders and halted all deliveries of Airbus SE AIR.PA jets
this year as it seeks to cut costs. "There's a question mark over the viability of the low cost
carrier business model post-COVID19," said Yusof, adding AirAsia
had little choice but to shrink its fleet size and slash staff
and saying its efforts to expand in India and Japan had not been
successful.
Elsewhere in the region, Thai Airways International
THAI.BK and Virgin Australia Holdings Ltd VAH.AX have
entered bankruptcy protection due to their inability to pay
creditors.
($1 = 4.2760 ringgit)