KUALA LUMPUR (REUTERS) – Malaysia’s budget airline AirAsia Group reported a record quarterly loss on Monday (March 29), as depreciation and impairments deepened the impact of lockdowns, but said it was confident of a full recovery in two years’ time.

Net loss in the October-December period widened to RM2.44 billion (S$794.3 million) versus RM384.4 million a year earlier, overtaking the RM1.33 billion loss estimated in a Refinitiv poll.

Revenue fell 92 per cent to RM267.4 million as capacity shrank by 88 per cent compared to a year ago, mainly because of lower capacity in Malaysia, the Philippines and Indonesia, as international borders remained closed, it said in stock exchange filing.

“A major portion of the loss for the period relates to depreciation of (right-of-use assets) and interest on lease liabilities amounting to RM654.2 million,” the airline said.

It also recorded a jump in impairment of receivables from affiliate AirAsia X due to its restructuring, and AirAsia Japan, which has started bankruptcy proceedings.

The quarter’s financial performance factored in one-off adjustments of impairments, fuel swap losses and the bankruptcy costs for AirAsia Japan, which it shuttered in October.

Lease liabilities were RM12.7 billion as of Dec 31, including deferred aircraft leases of approximately RM1.5 billion, it said.

AirAsia’s borrowings as of Dec 31 almost tripled to RM1.28 billion from RM428.9 million a year ago, mostly from deferred fuel hedge settlements.

AirAsia Group reported a 90 per cent fall in passengers compared to a year ago, resulting in load factor, a measure of how full planes are, dropping 15 percentage points to 67 per cent.

Group chief executive Tony Fernandes in a separate statement said the airline hoped for a full recovery in the next two years. He was also “very optimistic” international air travel would resume in the second half of this year as vaccination and testing accelerate.

AirAsia has been looking to raise up to RM2.5 billion to weather the pandemic, and said at the weekend it expects to secure RM1 billion in loans from Malaysian banks.