SYDNEY/SINGAPORE (Reuters) – Southeast Asian low-cost carriers, a key growth engine for planemakers and leasing companies for a decade before the pandemic, are faltering financially as demand plunges, raising questions over whether they can replace and double their fleets.
Auditors for Malaysia’s AirAsia Group Bhd (AIRA.KL) and Vietnam’s VietJet Aviation JSC VJC.HM are concerned about cashflows and funding, while Indonesia’s Lion Air has put the brakes on a planned flotation.
Even before the pandemic, bankers and leasing bosses were worried about whether aircraft ordered during a decade-long buying frenzy by Southeast Asian carriers would end up being delivered.
The carriers, which have offshoots in multiple countries, have 938 planes on order and lease most of their existing fleets of 476 planes, according to Aviation Week data.
To be sure, budget airlines with large domestic operations are well-placed for a post-pandemic recovery, despite having less financial support than state-owned rivals.
Their lower cost structure helps reduce the rate at which they burn cash and gives them the flexibility to benefit first from any recovery, analysts say.
But with borders shut and economic growth stunted, a return to the low-cost international travel needed for them to afford all of the planes they have on order looks increasingly doubtful – a worrying sign for the companies that make and lease aircraft.
“One area that I’m concerned about generally is just those low-cost carriers who ordered too many aircraft,” Robert Martin, chief executive of Singapore-based lessor BOC Aviation (2588.HK) told Reuters.
“I think there will still be work to be done on those during the third quarter,” he said, referring to negotiations over current lease contracts.
Until now, a fast-expanding middle class with disposable income and greater liberalisation have made the region lucrative for planemakers and their suppliers.
At the Singapore Airshow in February – before the pandemic spread broadly outside China – Boeing (BA.N) predicted Southeast Asian airlines would need 4,500 airplanes over the next 20 years, with Vietnam topping the traffic growth charts.
With that came predictions of jobs for 182,000 new commercial pilots, cabin crew or technicians.
Now employees are being laid off and furloughed and dozens of aircraft are undelivered, except for airlines still using financing arranged before the crisis, with manufacturers and leasing companies absorbing losses.
Consultancy IBA estimates there will be an oversupply of up to 2,500 planes globally over the next 20 months.
Lessors are offering payment deferrals to customers with grounded planes, but a possible cash crunch looms when the payment holiday ends, said Singapore-based aviation analyst Brendan Sobie.
“Even with a domestic recovery, you don’t have international,” Sobie said. “They are carrying too large of a fleet and can’t fully utilise the fleet because you can’t operate it back of clock on international flights at night.”
That threatens the delivery pipeline, though VietJet last month told shareholders it plans to add 12 Airbus (AIR.PA) jets to its fleet this year.
Before the crisis, VietJet had ordered planes from both Airbus and Boeing, in part to launch subsidiaries in multiple countries. But so far, it has only set up one offshoot, in Thailand, where it competes against subsidiaries of AirAsia and Lion.
AirAsia, which has said it is looking for additional debt and equity financing, expects to reach around 70-75% of normal capacity by the end of the year.
But the group has told Airbus it does not expect to take any new planes in 2020, prompting Airbus to put at least six undelivered aircraft up for sale.
“Airbus is working closely with all its customers at this most challenging time,” a planemaker spokesman said.
AirAsia declined to comment.
In Indonesia, Lion Air had already threatened to cancel its order for Boeing 737 MAX jets after a 2018 crash.
Bankers say the group has sharply cut spending due to the crisis. Lion Air declined to comment on its order plans.
Boeing said that although passenger traffic might take a few years to recover, it was confident in long-term demand in Southeast Asia.
Reporting and photo: Reuters
Atmosphere Core expands in South Asia with Atmosphere Living ultra-luxury residences
Atmosphere Core, a globally renowned name in hospitality, has announced the launch of Atmosphere Living as part of its continued expansion in South Asia. Headquartered in India, this new company will offer branded ultra-luxury residences with customised end-to-end amenities and indulgences, including coffee lounges, wine cellars, private transport, and bespoke concierge services.
The global branded residences market has experienced a remarkable 150 percent growth over the past decade, and projections indicate a surge in demand. With the real estate veteran Sandeep Ahuja at the helm as Managing Director, Atmosphere Living is strategically positioned to capitaliSe on this demand.
Atmosphere Living will focus on a conscious design philosophy. All properties will be built in harmony with the environment and will incorporate features such as smart recycling, efficient waste and water management, and green energy solutions.
Sharing his insights on the launch, Salil Panigrahi, Managing Director, Atmosphere Core, said, “Atmosphere Living will bring a distinctive offering to India, and is a brand to watch out for. It will combine Ahuja’s decades of experience, knowledge, and industry network in real estate with Atmosphere’s hospitality expertise, introducing unparalleled serviced residences in India.”
Positioned in major metropolitan areas, established second-home destinations, and undiscovered scenic locales nationwide, these projects will also present lucrative investment opportunities. Elite homeowners will have the option to lease their residences back to Atmosphere Living, allowing them to be rented out for income generation.
Sandeep Ahuja, Managing Director, Atmosphere Living, said, “There is currently a gap in the Indian realty landscape for ultra-indulgent serviced homes catering to affluent consumers. We aim to bridge this gap by curating serviced homes that offer indulgences such as entering homes using smart key cards, 24/7 butler services, fine dining, and co-working spaces, among others. Our ultimate desire is to enable our customers to experience a life of true luxury and exclusivity.”
A night of celestial wonders, luxury, and cosmic inspiration at Anantara Kihavah SKY Observatory by British astronaut Tim Peake
Anantara Kihavah Maldives Villas celebrated a historic milestone with the exclusive visit of the renowned British astronaut, Tim Peake. On the evening of November 2, Astronaut Peake hosted an exclusive space talk at SKY Observatory, the finest overwater observatory in the Indian Ocean, housing the most powerful telescope in the Maldives.
Perched gracefully over the pristine Maldivian waters, SKY Observatory provided an idyllic setting for this extraordinary event, complemented by a stunning sunset. The exclusive gathering attracted a full house of eager guests to a delightful evening that seamlessly blended science, luxury, and natural beauty.
The evening commenced with a lovely cocktail reception, where guests were serenaded by the soulful tunes of a live saxophone band. Attendees savoured exquisite cocktails and canapés as they eagerly awaited Tim Peake’s presentation.
Tim Peake’s talk unveiled his personal journey, where he shared his path to becoming an astronaut and narrated the rigorous training that astronauts undergo. He provided insights into life in space, the daily challenges faced by astronauts, and the awe-inspiring experiences he encountered during his
historic mission. He also offered a glimpse into his exciting future projects, leaving the audience both inspired and spellbound.
Following Tim’s presentation, an interactive Q&A session allowed guests to engage directly with the British astronaut. The audience posed thoughtful questions, deepening their understanding of astronauts’ unique experiences and the intricacies of space exploration.
The event was further enriched by the presence of the resort’s three SKY gurus, Hammadh Rasheed, Zunnoon Ahmed, and Ali Arushal, who conducted a stargazing session for the guests afterward.
The success of the event was evident in the overwhelmingly positive feedback from attendees, who left with a deeper appreciation for space exploration and a memorable evening to cherish.
The evening marked a significant moment in Anantara Kihavah’s history, showcasing the resort’s commitment to offering unique and memorable experiences for its guests. The presence of Tim Peake, a celebrated astronaut and highly accomplished author, added an extraordinary dimension to the resort’s already spectacular offerings.
Tim Peake is a renowned British astronaut who made history as the first official British astronaut to visit the International Space Station (ISS) and conduct a spacewalk during his six-month mission. He also achieved the remarkable feat of running the London Marathon from space. Beyond his extraordinary space endeavours, Tim is also a bestselling author with his most recent book Space: A thrilling human history published earlier this month.
An astronomer’s paradise, Baa Atoll in the Maldives, is one of the best places on earth to enjoy stargazing due to its proximity to the equator. Anantara Kihavah Maldives Villas promises a voyage of discovery on a private Indian Ocean Island, with Sky—an overwater observatory and luxury cocktail bar—providing guests a chance to sip champagne under the stars and explore the Universe.
Visit Maldives website adds atolls segment to showcase diverse regions
Maldives Marketing and Public Relations Corporation’s (MMPRC/ Visit Maldives) has added a new segment to the official Visit Maldives Website specified for atolls showcasing the diversity of the Maldives.
The segment, now live at atolls.visitmaldives.com provides in depth information regarding the different regions of the Maldives, divided by atolls, to refine the traveller’s experience, commencing with an in-depth exploration of Addu Atoll and Fuvahmulah Atoll.
With 26 atolls, the Maldives offers a wide array of unique accommodations and awe-inspiring travel experiences, and this informative section of our website will serve as a gateway to discover the hidden treasures unique to each area. This falls under MMPRC’s initiatives to encourage tourism growth in all regions of the Maldives, broadening exposure to the diverse tourism products available in the Maldives.
The goal is to elevate Visit Maldives’ digital marketing landscape by showcasing the Maldives as more than just a honeymoon destination with various accommodation options. This initiative is driven by a desire to increase awareness about the distinctive offerings within each of the Maldives’ atolls. It aims to positively shape their perception of the Sunny Side of Life brand by curating engaging content that highlights the unique features of the atolls and diverse experiences available in the islands.
Additionally, the initiative will target the affordable luxury market to promote the Maldives as the most appealing option for short holidays and weekend getaways under a unified Maldives brand umbrella.
MMPRC aims to continue exploring other atolls in the Maldives as well, encouraging growth and tourism development in all regions of the Maldives, building on the foundation we have created to promote the destination beyond the traditional paradigms of sun, sand, and sea.
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