“Real profits have collapsed and AirAsia now needs a recapitalisation that will dilute existing shareholders by more than 100 per cent,” reads the GMT report.
Of course, one analyst does not a crisis prove, and other AirAsia-watchers have been either positive or only moderately critical of the airline’s business model.
Yet GMT’s words touch a nerve with investors because they feed wariness that AirAsia has grown too far, too fast.
After blistering success in Malaysia and Thailand, Fernandes moved the franchise into Indonesia, the Philippines, Japan and, most recently, India.
Unlike Malaysia, though, Indonesia and the Philippines already had strong incumbent LCCs – Lion Air and Cebu – that have proved more than a match for offshoots that AirAsia must clumsily pilot from minority shareholder positions.
Different problems in Japan led to the collapse of AirAsia’s venture there after barely a year, and in India the airline is suffering with the rest of an overstuffed market from outdated operating rules and bloody fare wars.
Compounding concerns is the fug of hubris that surrounds Fernandes himself, whose ventures into Formula 1 and the English Premier League have both failed in the last year.
To restore confidence promises must be fulfilled to take AirAsia Philippines and Indonesia AirAsia into the black this year, ahead of mooted IPOs of both carriers in 2017.