Annual Report 2020

Management Discussion& Analysis Never one to “waste” a crisis, we have used the downtime in flying over the past year to pivot from being primarily an airline into an all-in-one digital lifestyle company anchored on travel. Our digital transformation, which began in 2018, was accelerated in 2020 with the creation of airasia super app on which we are now offering a variety of product lines – from food and fresh produce to skincare, cosmetics and spa treatments – to satisfy users’ everyday as well as health and travel-related needs. What’s more, through BIG Rewards, our loyalty programme, earning and burning points has never been easier or more rewarding. Every spend earns points that can be used for any other purchase on the platform. Members can even convert points from partner merchants and vice versa. Each one of our other digital businesses has also grown tremendously. Teleport is no longer just a cargo operator; leveraging demand for e-commerce logistics, it now offers home delivery in 77 Asean cities. With BigPay, users in both Malaysia and Singapore can now send money to bank accounts in 10 countries - with India, Nepal, Bangladesh, Australia and China being the latest additions. We have even set up a franchise for our restaurant, Santan, which now boasts nine outlets throughout the Klang Valley, as well as three satellite kitchens catering specifically to home deliveries. Of particular pride, we recently also established our own digital training academy. Through this learning hub, we will be able to equip not just our Allstars but also SMEs and other third parties with the skills to reap the multifarious benefits of technology in order to thrive in the digital era. Structurally, AirAsia now comprises two core businesses – Airlines and Digital – the latter encompassing all the digital businesses that had previously been grouped under RedBeat Ventures (RBV). Although RBV has been renamed airasia digital, we have kept the RedBeat brand going with the newly set up digital training centre, Redbeat Academy, in collaboration with Google. Overall, there can be no denying that it has been a tumultuous year, with the need to survive superseding everything else. And yet, as described above, we have managed to celebrate many successes with the pivot to become more than just an airline. While rationalising capacity in each AirAsia airline and focusing on capturing domestic demand, we have made significant advances in our digital businesses. Our performance given the pandemic has been very commendable; thanks, as always, to our fantastic and malleable team. For AirAsia, the biggest casualty has not been the huge loss in revenue, which we are confident we will be able to build up again; but having to let go of many Allstars through no fault of their own, while reducing the salaries of those who stayed on. We recognise how incredibly tough the year has been on our people and would like to express our fervent desire to put things right again. To Allstars who have left us, rest assured that once our operations start picking up, we hope to welcome you back to AirAsia. To those who have remained on board, and continue to give your all despite the challenges, we have been working on a scheme to demonstrate our appreciation for your sacrifices. More on this is briefly explained below. THE YEAR OF COVID-19 On 11 March 2020, the World Health Organization (WHO) declared Covid-19 a pandemic. To protect lives and livelihoods, governments reacted by closing down businesses and imposing various social as well as movement restrictions. As cases emerged in Asia before the virus spread to the four corners of the world, lockdowns were imposed in this region even earlier. While necessary, these containment measures led to a global recession – and 4.3% economic contraction – a magnitude not seen since the Great Depression. On 62 AIRASIA GROUP BERHAD