AirAsia accounting, cash flow questioned in GMT research report

[SINGAPORE] AirAsia Bhd's accounting and cash flow were questioned by research firm GMT Research, which said it's in discussions with the region's biggest budget carrier about its concerns.

The June 10 report questioned the airline's "accounting, profit generation, cash-flow issues, leverage and group structure," GMT Research's founder Gillem Tulloch said in an e- mail Friday. The report is currently available only for the researcher's subscribers and the firm can publicly discuss the matter only from June 24, it said.

AirAsia Group Chief Executive Officer Tony Fernandes declined to comment.

Shares of AirAsia and its long-haul affiliate AirAsia X Bhd plunged in Kuala Lumpur trading Thursday on record volumes in reaction to the GMT report, Malayan Bank Bhd analyst Mohshin Aziz said Friday.

Sepang, Malaysia-based AirAsia's stock slumped as much as 5 per cent Friday in Kuala Lumpur, while AirAsia X shares were little changed as of 1:30 p.m. in the city.

"AirAsia's accounts are transparent," Mr Mohshin said in a Friday report. Pricewaterhouse Coopers, the airline's auditor, approved the 2014 accounts of the airline without any qualification, Mr Mohshin said.

An e-mail sent to Allan Toh, Pricewaterhouse's executive director for Malaysia, seeking a comment on the report wasn't immediately answered.

GMT Research is an accounting research firm licensed by Hong Kong's Securities & Futures Commission, not a short seller, the firm said on its website. GMT, along with Iceberg Research and short seller Muddy Waters criticised commodity trader Noble Group Ltd's accounting practices earlier this year.

Tune Air Sdn is the largest shareholder of AirAsia, controlling 19.1 per cent of the stock, according to data compiled by Bloomberg. Tune Group Sdn is the biggest shareholder of AirAsia X, with 10.2 per cent. AirAsia held 7.9 per cent of AirAsia X.

BLOOMBERG