Annual Report 2020

45. COVID-19 Pandemic (cont'd.) b) Working capital management (i) T he Group is currently in discussion with its lessors to negotiate the restructuring of leases to waive the lease rentals in arrears as well as reducing future lease rates with a corresponding longer lease term where necessary. The lease rentals deferred as at 31 December 2020 is disclosed in Note 29 to the financial statements. (ii) D uring the financial year, the Group has significantly reduced its cash burn rate through various cost containment and optimization exercise, and working capital management which includes, amongst others: - I mplementation of cost cutting measures such as right sizing of manpower, salary cuts for management, staff and directors; - Negotiation of deferrals with lessors, suppliers and partners; - Restructuring of fuel hedging positions; - O perational staffs were put on furlough, keeping only minimal operational staff based on current capacity; and - Closure of its AAJ’s operations and partial disposal of its stake in AAI to TSL. c) 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 significantly reduced the passenger capacity ever since the outbreak of COVID-19 in March 2020. Passengers carried was at a low of 204,000 passengers during Q2 2020. As local travel restrictions eased, the number of flights and passengers flown increased, with passengers carried improving to 1.9 million passengers during Q3 2020 and 1.3 million passengers in Q4 2020. As of April 2021, the Group recorded 1.26 million passengers flown. The Group implements continuous flight capacity and network revenue management in response to global travel restrictions and the current progressive uplifting of travel restriction by the respective countries. This can be seen through effective fleet management, with management making timely decisions to either reinstate flights or hibernate the fleet as and when necessary. The capacity of the flights moves in tandem with local regulatory requirements and developments of the active COVID-19 cases of the corresponding flight destinations. The respective countries of which the Group operates in is currently in its various stages of rollout of vaccination programmes. Coupled with better education and testing and alongside strong support for leisure travel bubbles among low risk countries and territories and the push for global digital health passports are steadily paving way for major travel reboot. From the progress of vaccination in countries such as United States and United Kingdom, there is a clear correlation of significantly lesser daily cases when vaccination programmes reaches a larger population. The Group consistently monitors the route profitability and concentrates its recovery on the most profitable and popular routes. Due to this uncertainty, the Group had and will continue to adjust future available capacity to match observed booking trends for future travel to optimise the load factors of each flight. 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. Should the going concern basis for the preparation of the financial statements be no longer appropriate, adjustments will have to be made to state the assets at their realisable values and to provide for further liabilities which may arise. Notes to the Financial Statements For the financial year ended 31December 2020 280 AIRASIA GROUP BERHAD