AirAsia Group clarifies misleading statement from UOB Kay Hian report
By NST Business - March 29, 2021 @ 4:49pm
KUALA LUMPUR: Airasia Group Bhd has highlighted that UOB Kay Hian Research's report on the the airlines' share grant scheme (SGS) and corporate governance are misleading.
"We would therefore like to provide clarification to set the record straight," AirAsia Group head of people and culture PK Medappa said, adding that the company has always at the forefront of innovation.
He said AirAsia has undergone a remarkable transformation throughout the pandemic from just an airline into a digital consumer and lifestyle platform and this is set to grow to form a significant half of its total business in years to come.
In a report, UOB Kay Hian Research had said 'we are perplexed by AirAsia's proposal to issue new shares at no cost to key executives and question the rationale of the move at this juncture, when AirAsia is facing substantial forward liabilities, after having disposed of its fleet.'
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'Investors buying into forward prospect but have to be mindful of forward liabilities and corporate governance issues as well,' UOB Kay Hian Research report had said.
Medappa said despite AirAsia Group's request for a revision of the report, the misleading statement remains, causing damage to the airline's reputation.
Medappa further said the company recognises the contributions made by many senior executives, managers and every Allstar towards making this a reality.
"However, the situation we are currently in with prolonged effects due to Covid-19 pandemic has made it rather difficult for the company to continue to remain competitive in rewarding its employees in the traditional manner with appropriate cash and bonus payments," he said.
Medappa also said as part of the company's cost containment and cash conservation exercise, a salary sacrifice scheme ranging from 15-100 per cent was put in place in March 2020, affecting the take home amounts for many staff, or Allstars.
"Allstars will always come first. They have suffered financially due to the Covid-19 pandemic, and still shown loyalty towards the company.
"We therefore want to reward these employees in a manner that aligns the upside in shareholder value creation to wealth creation opportunities for the Allstars," he said.
Medappa said long term incentive scheme (LTIS), comprising both employee share option scheme (ESOS) and SGS, is a sustainable alternative to reward eligible employees and directors of the company.
He said the long term employee incentive programme serves to reward strong employee performance, supports retention of talent and helps conserve cash at the same time.
"The incentive programme is similar to many other airlines and industries world over which encourages stronger employee performance aligned to shareholders' interests.
"Through this proposed scheme, we would be able to mitigate paying competitive cash bonuses in order to retain a strong talent pool over the next few years, and thus supporting the company's strict cost containment measures," he said.
On the corporate side, Medappa said the company's recent private share placement exercise was very well received and supported by many prominent institutional investors both locally and abroad.
He said the company expects international flying to commence in the second half of 2021 and throughout 2022 as majority of its key international markets are in green zones and likely to reopen their borders first.
"Meanwhile, our digital transformation strategy over the past year has been accelerated and continues to gain momentum, to ensure strong additional non-airline revenue growth with an ecosystem of over 15 synergistic travel and lifestyle product lines all leveraging off each other.
"We have reviewed every aspect of our operation to put in place the right platform for a viable and sustainable future. It is therefore crucial for the company to be able to retain its best talents in order to support future aggressive growth in both our airline and digital businesses," he said.