FACULTY OF BUSINESS MANAGEMENT

BACHELOR OF BUSINESS ADMINISTRATION (HONS.) MARKETING

(BA240)

BA2401B

PRINCIPLES AND PRACTICE OF MANAGEMENT

(MGT 420)

PREPARED FOR:
MADAM NUR AMYRA BINTI MAT ISA

PREPARED BY:

NAME ID MATRIC

MUHAMMAD AQIL BIN AB. AZIZ 2022495184

NUR DINI SUHAILA BINTI AHMAD SALJI 2022608024

NUR QISTHINA BINTI MUKRAM 2022899868

RABIATUL ADAWIYAH NURUL AIN BINTI 2022487734

OMAR
NURQISTINA HASYA BINTI NOOR AZLAN 2022675636

SUBMISSION DATE

3 JANUARY 2023
 TABLE OF CONTENTS
ACKNOWLEDGEMENT 2
INTRODUCTION 3
PROBLEMS AND OPPORTUNITIES INDENTIFICATION OF COVID-19 4

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ACKNOWLEDGEMENT

First and foremost, we would like to express our gratitude and thankful to Allah
S.W.T, thanks to His blessing, we had done such a beautiful task with a great success.
We also would like to thank my beloved lecturer, Madam because she such a good
helper to us from the beginning until the top. Madam has given her guidance, advice,
and directions to try and do and complete this proposal. Praise to Allah S.W.T, on
balance the good works, finally this assignment is complete. We also would like to
thanks our family for giving me the support and also for sponsoring us regardless of
what they’re going to give us the simplest support to stay on our momentum to the
current. Thanks to all or any of our classmates whom also help us in giving me the
data when needed. We also, send my appreciation to our family for her moral support
to try to the simplest during this MGT420 assignment. Lastly, we might prefer to
thank all persons who had involved during this proposal either directly or indirectly
that they had been an excellent helper to me in completing this proposal.

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INTRODUCTION

Covid 19 hit the world almost 2 years ago, and no one could have predicted that
Covid 19 would have such a large impact on the global economy. Most economic sectors to
be disrupted or stopped as a result of the Movement Control Order Enforcement (MCO)
order. The Movement Control Order Enforcement (MCO) has paralyzed the economic
sectors of some countries, as well as the majority of industries and businesses. Many
economic sectors have suffered significant losses throughout the Movement Control Order
Enforcement (MCO) period, including hospitality, education, aviation and tourism. Some
companies have already made the decision to shut due to inability and to meet operational
costs. We can observe that several well-known Malaysian airlines have been forced to lay off
a large number of personnel or have chosen to stop their operations during Covid 19. AirAsia
Group Bhd announced that up to 96 passengers from its aircraft will be unable to fly during
Movement Control Order Enforcement (MCO) period.

AirAsia was established in 1993 and began operations on 18 November 1996. It was
founded by a government-owned conglomerate, DRB-HICOM. On 8 September 2001, the
heavily indebted airline was bought by former Time Warner (now known as WarnerMedia
executive Tony Fernandes and Kamarudin Meranun's company Tune Air Sdn Bhd for the
token sum of one ringgit (about US$0.26 at the time) with US$11 million (MYR 40 million)
worth of debts. The partners turned the company around, producing a profit in 2002 and
launching new routes from its hub in Kuala Lumpur, undercutting former monopoly
operator Malaysia Airlines with promotional fares as low as MYR 1 (US$0.27). In 2003,
AirAsia opened a second hub at Senai International Airport in Johor Bahru and launched its
first international flight to Bangkok.

The main core business of AirAsia is an investment holding company with a portfolio
of synergistic travel and lifestyle businesses that leverage data and technology, including
AirAsia Super App, fintech BigPay and logistics venture Teleport. Capital A’s vision is to
create and deliver products and services that focus on offering the best value at the lowest
cost, underpinned by robust data accumulated over 20 years in operation and one of Asia's
leading brands that remains committed to serving the underserved.

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PROBLEMS AND OPPORTUNITIES INDENTIFICATION OF COVID-19

AirAsia laying off their employees’

The Covid 19 epidemic, which has been ragging in Wuhan, China, since in the end of
2019, has had a significant impact on a large number of people. The aviation and tourist
sector are those most impacted by Covid 19. As a result, the majority of airlines worldwide
agreed to reduce workers. After the closure of several printing and media companies in
Malaysia, it is now the turn of AirAsia, as the tourism industry remains closed. Air Asia, also
known as low-cost airlines, decided to take the last resort after all mitigation measures were
insufficient. Several hundred of AirAsia workers will be laid off after the company has been
struggling for months. This actually happened because, for almost 3 months in a row, AirAsia
planes did not move anywhere and causing the airline company to incur massive losses.

Not only that, AirAsia flight crew, including flight attendants and management were
forced to resign in order to reduce labour costs. Malindo Air laid off 2,647 workers in January
due to financial problems caused by the Covid 19, while AirAsia, laid off approximately
2,400 workers in total. Tan Sri Tony Fernandes has confirmed that AirAsia that 10% of
AirAsia’s 2,400 employees will be laid off. He added that the decision to lay off these
workers was necessitated by the aviation sector’s inability to recover in the future. These
terminated employees will be compensated as a result of this decision.

Employees who are not given written notice of termination, may see their wages
reduced. As a starting point, the salary cut will be in effect for three months. The AirAsia
group will operate as usual but on a smaller scale. Furthermore, AirAsia will consider raising
ticket to cover AirAsia’s operating costs through Covid 19.  AirAsia has also promised to
save as many laid-off crews as possible. Fernandes also expressed his regret over the loss of
2,000 workers as a result of the spread of Covid 19. As such, Fernandes promised to rehire
AirAsia crews before retiring and when AirAsia's airline business returns to normal.

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AirAsia's employees' salary were being reduced

AirAsia's biggest income comes from their passengers who love to travel by air
using their airline. However, during the Movement Control Order (MCO), the state and
international border were closed. Therefore, most of the people were not able to travel
domestically or internationally as they were ordered to stay at home. During the pandemic,
AirAsia had no income as 96% of its aircraft were not set to fly. The founder, Tony Fernandes
and the Executive Chairman of Air Asia, Kamarudin Meranun did not take a salary during the
period. Beside that, the AirAsia staff has agreed to accept the temporary pay reductions
between 15% up to 75% depending on the seniority. This agreement was made as the airline
was facing terrible financial problems during the pandemic. This is due to the critical
financial situation during the pandemic.

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Low number of customers travelling during the MCO

The aviation sector plays a crucial role in a country's economic development. It stimulates
other sectors such as tourism, hospitality, and trade. It provides important transportation for
tourism and contributes multiplier effects to the local economy. AirAsia was serving 159
towns before the Covid-19 outbreak. The number of passengers in the Asia-Pacific districts
for all airlines would come to 3.9 billion by the year 2037 estimated by the International Air
Transport Association. The Covid-19 pandemic brought unprecedented impact to the tourism
industry especially airlines and hotel businesses.

The airline sector faces one of the greatest challenges in its history. The financial performance
and cash flow of AirAsia were severely impacted due to the travel and border restrictions
implemented by many countries around the world. AirAsia struggles as the airline’s share
price has fallen 65 percent in 2020 due to the Covid-19 outbreak. According to the company’s
financial statement, at the same time last year, AirAsia posted a net loss of RM993 million
($238.3 million), compared with a net profit of RM17.3 million.

The pandemic has forced AirAsia to look for financial support from the government for the
first time. The spread of Covid-19 has made everyone delay to travel. People must have
selfisolated in their own home to break the chain of Covid-19. Generally, the Covid-19
pandemic has disrupted everyone’s travel plans and had to spend their holiday seasons in their
home. Unfortunately, it did not just end there. The corona virus could not be put at ease and
once the holiday seasons ended, everyone had to go through everything online, work from
home to virtual classes. As travelling abroad was strictly restricted, AirAsia Berhad was
focusing on domestic travels and solely relied on those operations before they came up other
alternatives to save their revenue, even though it is undeniable that this strategy greatly affects
the income (The Star, 2021). The Covid-19 has greatly impacted the number of airlines’
passengers for the whole year of 2020. The Co-founder of AirAsia, Tony Fernandes, has
stated that the demands for air travel have abruptly collapsed since February and March 2020
due to the corona virus breakout. Air Asia Berhad has also stated about the reductions in
capacity were mainly from Malaysia by 17% and the Philippines by 1% because domestic and
international routes were discontinued in the middle of March.

The pandemic has given a negative result as the border closures in most of Air Asia’s key
customers markets including Malaysia, Thailand, Indonesia, Philippines, China and India.
This has caused a 22% reduction in total passengers carried in the first quarter to 9.85 million.
Even, through the research that has been made to collect the data, the differences in the digits
between before and after the pandemic was drastic.

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Only a few customers out of the whole had the chance to travel with valid reasons. The
customers have even stated that before travelling they were required to undergo multiple
procedures. It does not matter whether they have valid reasons to travel but if they have failed
to fulfill the procedures, their application for the travelling will be rejected. At the early stage
of the pandemic, the vaccine was not formulated yet and even so at this very moment, not
everyone can receive their vaccination anytime or whenever they want. Adding on, swab or
rapid test is not known as something cheap and affordable to everyone which leads to the
cancellation of travelling. That is why, the revenue got affected because of the pandemic as it
is becoming a great barrier to everyone and that includes the customers and also the company
itself.

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Have commitment to pay maintenance service.

During the Covid-19 pandemic, many countries has closed their borders. Air Asia is also one
company of the airlines forced to stop their services. These low-cost airlines are also not able
to generate the same revenues before. AirAsia also has financial commitments to pay fuel
suppliers, petrol, leasing agents and maintenance services. Even there have no flight
attendants, there still have commitment to pay for the petrol supplier although 96% of the
aircrafts were not operating during the Movement Control Order (MCO). Airplanes that are
not well maintained will experience technical issues in flight operations. Maintenance needs
to do because elements such as dust, insects, bird nests or other objects may damage the
aircraft system. Maintenance of a large number of aircraft is not easy to do. Maintenance
costs also cannot be covered during covid-19. This is because the flights are not able to travel
domestically or internationally during MCO.