Annual Report 2019

48. COVID-19 Pandemic (cont’d.) Arising from the COVID-19 pandemic, the Group and the Company have implemented several measures to weather through this current challenging time. These efforts are on-going as the Group and the Company continue to seek support from their vendors and business partners to address their cash flow requirements. The following measures had been taken, with further additional efforts to be taken: a) Recovery from COVID-19 Pandemic As of June 2020, the respective countries, i.e. Government of Malaysia, Indonesia and Philippines had allowed domestic travel and interstate travel subject to certain limitations. The Group has resumed operations on a staggered basis in June 2020 and has seen positive developments on its business operations as passenger seat booking trends, flight frequencies and load factors are gradually improving to cater for the increasing demand. The Group expects the business operations to gradually return to the normal operations level by early 2021. Nonetheless, the overall timing of recovery of the COVID-19 pandemic would affect the ability of the Group to meet its forecasted revenue, which in turn affect the Group’s cashflow generated from operations. b) Funding To shore up liquidity, the Group’s existing lenders have provided support through rollover of facilities. In Malaysia, certain financial institutions have indicated their willingness to support the Group and the Company’s request for funding with amounts of up to RM1.0 billion, of which certain amount is eligible for the government guarantee loan to be provided under the Danajamin PRIHATIN Guarantee Scheme (“DPGS”) and the outcome is expected to be favourable. The Company’s subsidiaries in Philippines and Indonesia have also applied for bank loans from their respective existing and new lenders and are on various stages of application. In Philippines, the Group is expected to obtain funding through the government guaranteed loan under the Philippine Economic Stimulus Act (PESA) which is expected to be passed as law in September 2020. The Group and the Company plan to raise capital of up to RM1.4 billion as and when required to strengthen its equity base and liquidity and expect successful implementation on these capital raising plans. c) Working capital management The Group managed to seek deferrals for payment of aircraft operating leases with lessors and restructured fuel hedges exposures with certain counterparties to reduce the Group’s fuel hedging losses. The Group is currently in the process of negotiating further waiver or deferral of lease rentals and restructure the remaining fuel hedge exposures with supportive lessors and counterparties. Further, the Group and the Company have implemented group-wide temporary salary reduction ranging from 15% to 75%, depending on salary levels with effect from April 2020 and voluntary salary cuts of 2 executive directors of 100% since March 2020. The Group and the Company continuously relook at the efficiency of the organisation structure and the right resource size to achieve further savings in human resource cost. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2019 (CONT’D.) 336 MORE THAN JUST AN AIRLINE >