AirAsia Bhd’s (AAB) audit committee has issued a statement following the GMT Research report, pointing out that it cannot have legal control or legal power over its associate companies in Indonesia, Philippine, Thailand and India, HERE.
This was the best respond that AirAsia could come out with to rebut what had been published by GMT reseach, Hong Kong.
AIrAsia should have instructed its auditor, PriceWaterHouse to rebut what have been published by GMT research but it didn’t.
The AirAsia Audit Committee’s above statement was made in respond to the GMT research allegations of AirAsia involvment in questionable accounting practices, HERE.
Yesterday, CNBC, had published critical respond from GMT research. GMT research did not withdraw any of its allegations levelled against AirAsia’s questionable accounting practices. It went further to publish more details of the questionable accounting practice.
GMT: “AirAsia is closed to default”.
The interesting excerpts of the CNBC’s reports are repropduced below (please watch the interesting video interview of GMT officer through the link below):
The negative analyst report that sent AirAsia shares into a tailspin finally went into wide release Wednesday, alleging the budget airline needs to raise as much as $1.9 billion to pay down debt.
“AirAsia may be a new dog, so to speak, but it’s playing a very old trick,” GMT said in the report. The jibe is among a mixed bag of accusations contained in the report, which GMT distributed to clients on June 10, but withheld from the media until June 24.
It primarily accuses AirAsia of “milking” transactions with its money-losing associates in the Philippines and Indonesia, such as plane lease and maintenance deals, to boost the parent’s operating cash flow.
Because the associates currently aren’t able to pay their bills to the parent, “AirAsia is extending significant capital to them, essentially gearing up, funding its own profits and flattering its operating cash flows,” the report said, alleging the carrier is close to default.
GMT said AirAsia doesn’t disclose the profit recognized from these transactions, just the revenue. It estimates that AirAsia used these deals to inflate profits by 39 percent over the past five years.
“AirAsia seems to be making more money leasing planes to associates than flying planes around the region,” Gillem Tulloch, a partner at GMT, said in a phone interview. “AirAsia should pass the value back to its associates. It doesn’t have to take such a large cut.”
GMT advises selling or shorting AirAsia stock, saying its fair value is 1.23 ringgit a share or less. AirAsia hasn’t responded to CNBC’s requests for comment.
For full report and the CNBC interview in U-Tube, HERE.
The closing of price of AirAsia share on 25-6-2015 was RM1.60. Please digest the above carefully before you put your good money into the stock market.