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UPDATE 1-Malaysia's AirAsia shuts Japan operations

(Add AirAsia Japan executive comment, background)

KUALA LUMPUR, Oct 5 (Reuters) - Malaysia’s flagship budget airline AirAsia Group Bhd is ceasing its Japanese operations immediately, the carrier said in a bourse filing on Monday.

The airline said it has been notified that the board of directors of its majority-own subsidiary AirAsia Japan (AAJ) has taken a decision to cease operations with immediate effect.

“We respect and have agreed to the decision made by AAJ as this would reduce the cash burn of AAJ and the Company amid the highly challenging operating conditions in Japan which have been aggravated by the COVID-19 pandemic,” it said.

Group Chief Executive Officer Tony Fernandes last month told Reuters that the group was reviewing its business in Japan due to the impact of the pandemic.

The group, which employs around 300, has reported it flew 98% fewer passengers in April-June than in the same period of last year.

AAJ Representative Director and Chief Operating Officer Jun Aida said in a separate statement that the decision was made after a thorough business review.

“Despite our unrelenting efforts to sustain operations through successive and wide-ranging cost reduction initiatives, we have concluded that it would be an extremely challenging feat for us to continue operating without any visibility and certainty of a post-pandemic recovery path,” he said.

AAJ, the smallest unit in AirAsia’s airline business, was incorporated in July 2014 and has been operating three planes for domestic and international flights from Chubu Centrair International Airport. (Reporting by Liz Lee; editing by Jason Neely and Tomasz Janowski)

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