AirAsia Experiences Turbulent Stock Market

AirAsia Group has announced that stock exchange operator Bursa Malaysia dismissed its application to extend a relief period that prevented it from being classified as a Practice Note 17 (PN17) company, a status that relates to companies that are in financial distress.

Companies classed as PN17 must submit to the stock exchange a proposal to restructure and revive the company in order to maintain listing status. In a disclosure to the exchange on January 13, the AirAsia (AK, Kuala Lumpur Int’l) parent confirmed that, according to Bursa regulations, with the expiry of the relief period it is now “required to reassess its condition.”

The PN17 financial distress criteria had been triggered in July 2020 after independent auditors from Ernst & Young highlighted in the group’s annual results that net loss and liabilities at the end of 2019 significantly exceeded assets, flagging material uncertainties that cast doubt on its ability to continue as a going concern.

In light of the pandemic, Bursa Malaysia gave the group 18 months to take steps to address the issue, and when the relief period expired on January 7, AirAsia filed an appeal to prolong it. This has now been rejected, risking delisting from the exchange.

The following day, on January 14, Bursa Malaysia issued a statement saying that short selling for AirAsia stock had been suspended for the rest of the day as “the last done price of the approved securities dropped more than 15 sen [cents] from the reference price.” Trading will be reactivated at 0830L (0030Z) on the next trading day, Monday, January 17.

Meanwhile, in Jakarta, the Indonesia Stock Exchange (IDX) again suspended trading in Indonesia AirAsia (QZ, Jakarta Soekarno-Hatta) on January 12. Trading had only resumed on January 3, nearly two-and-a-half years after its shares were suspended due to its failure to meet the 7.5% threshold for free-floating equity.

This time, the IDX cited unusual market activity the previous day when the stock closed at 24.4% up. In fact, the bourse said, Indonesia AirAsia’s shares jumped in value by 185% from IDR184 rupiah (USD0.0129) on January 3 to IDR525 (USD0.0367) at the close of trading on January 11. The exchange appealed to investors to pay attention to the performance of listed companies and their disclosures of information before making investment decisions.

In a statement, Indonesia AirAsia clarified: “There is no material information that has not been submitted by the company to the public; and there is no information about the company circulating as rumours or in the mass media.”