Annual Report 2019

FINANCIAL STATEMENTS 48. COVID-19 Pandemic (cont’d.) d) Capacity and Network Management and Marketing activities The lock down and restriction in travels issued by the government in the countries that the Group operates in has reduced the passenger capacity in the second quarter ended 30 June 2020. However, in the month of June 2020 where domestic flights have started in the various countries, average load factors range between 45% to 65%. The Group implements continuous flight capacity and network revenue management in response to global travel restrictions and the current uplifting of travel restriction by the respective countries. This can be seen with the Group reporting a healthy group-wide load factor of 77% in the first quarter of 2020. This was achieved through proactive capacity management, particularly in the months of February and March 2020. The corresponding reduction was seen in March 2020, where capacity fell by 11% for the quarter ended 31 March 2020 as compared to the quarter ended 31 March 2019. Notwithstanding, the Group reported a healthy 8% increase in average fare in the first quarter of 2020 as compared the same quarter last year. The gradual increase in passenger seat booking, flight frequencies and load factor during the progressive upliftment of travel restriction signifies positive development with strong rebound in demand for air travel anticipated. Accordingly, the directors are of the opinion that the going concern basis used in the preparation of financial statements is appropriate and no adjustments was necessary to be made to the financial statements relating to the recoverability and classification of the carrying amount of assets or the amount and classification of liabilities. The financial statements have been prepared based upon conditions existing at 31 December 2019 and considering those events occurring subsequent to that date, that provide evidence of conditions that existed at the end of the reporting period. As the outbreak of COVID-19 occurred after 31 December 2019, its impact is considered an event that is indicative of conditions that arose after the reporting period and accordingly, no adjustments have been made to the financial statements as at 31 December 2019 for the impacts of COVID-19. For the next financial year ending 2020, based on the performance for the remainder of the year, the Group will reassess the Right-of-Use (“ROU”) assets and goodwill impairment and recoverability of deferred tax asset assessments. AIRASIA GROUP BERHAD ANNUAL REPORT 2019 337