AirAsia X (AirAsia.com) (Kuala Lumpur) reported a second quarter net loss of MYR 128.9 million ($40.6 million), an increase from the MYR 32.3 million net loss ($10.1 million) for the same period a year ago.
The long-haul low-cost carrier issued this full report through its parent:
AirAsia X Berhad, the long-haul low-cost airline affiliate of the AirAsia Group reported its financial results for the Second Quarter (“2Q14”) and the First Half-Year ended June 30, 2014.
On the back of its strategy of capacity and network expansion to strengthen its market leadership, the Company recorded revenue of RM 671.6 million for 2Q14, a year-on-year growth of 36.7%, and cumulative revenue of RM 1.42 billion in 1H14, a 38.5% y-o-y growth compared to the previous corresponding period.
This increase was underpinned by the significant growth in Available-Seat-Kilometre (“ASK”) capacity that was introduced in the second-half of 2013, recording a y-o-y growth of 47% to 6.26 billion in 2Q14 and a y-o-y growth of 53% to 12.48 billion in 1H14. Passenger traffic volume in Revenue-Passenger-Kilometer (“RPK”) grew by 44% in 2Q14 to 5.04 billion and by 53.3% to 10.38 billion in 1H14, resulting in a passenger load factor of 80.4% in 2Q14 and 83.1% in 1H14. Consistently delivering load factor performance above 80% demonstrates the ability to keep stimulating new travel and tourism demand to fill up the new capacity added. This solidifies AAX’s position as the market leader in passengers carried to its core markets in Australia and North Asia, as well as its position as the global market leader in the long-haul LCC space.
The capacity expansion into new cities in its core markets, such as Nagoya, Xian, and Chongqing, as well as additional frequencies to cities such as Sydney, Melbourne, Taipei, Seoul, and Tokyo have increased its Fly-Thru connectivity and attracted new passenger traffic flow that now uses KLIA2 as a regional aviation hub. Notably, the Company has approximately tripled its market share of passengers travelling between North Asia and Australia on a one-stop service, generating a significant new customer base this year compared to the previous year.
The Company continues to operate a higher number of flights for charters and wet-leases, with total revenues from this segment growing from RM33.0 million in 1H13 to RM148.6 million in 1H14. These flights are not captured in the ASK and RPK tabulations as they are unscheduled flights. Ancillary revenue grew by 48.2% y-o-y to RM290.8 million in 1H14, compared to RM196.3 million in the previous period, resulting in an ancillary revenue per passenger of RM138.50 from the 2.1 million passengers carried. Cargo segment contributed RM59.3 million for 1H14, and increase of 43.8% y-o-y from the previous corresponding period. Two A330-300 aircraft were leased to Thai AirAsia X (“TAAX”), its affiliate, generating RM25.3 million in lease income revenue in 1H14. TAAX commenced daily flights to Seoul since June 17, 2014 and will operate flights to Tokyo-Narita and Osaka from its hub in Bangkok from September 2014.
The resultant unit-revenue yield, as measured by Revenue-per-Available-Seat-Kilometre (“RASK”) was 10.79 sen in 2Q14, a -7% y-o-y decline, and 11.44 sen in 1H14, a -10% y-o-y decline. The rate of decline in RASK has been steadily improving from -15.1% in 4Q13 and -12.4% in 1Q14. Based on forward sales to-date and barring any unforeseen macro-factors, the Company expects RASK to resume positive growth in the second-half of this year, as the capacity expansion last year matures and the rate of capacity growth progressively slows down. Although the RASK yields have declined this year from 2013, they remain higher than the RASK yields recorded in 2010, 2011, and 2012, signalling overall route network portfolio maturity. The Company continues to target a positive growth in RASK for the full year of 2014 from 2013.
Operating expenses increased 61.5% y-o-y from RM986.3 million to RM1,593.1 million in 1H14. Although unit-cost as measured in Cost-per-Available-Seat-Kilometre (“CASK”) increased 4.6% y-o-y to 12.69 sen, CASK-excluding fuel declined -2.6% y-o-y to 6.35 sen. CASK in US cents declined -1.4% to 3.89 cents, due to the effect of the US dollar-Malaysian Ringgit currency movement, as a majority of costs, especially fuel, aircraft and engineering expenses, are denominated in US dollars. CASK excluding fuel in US cents dropped -8.5% to 1.94 cents. Average fuel price increased from US$127/barrel in 2Q13 to US$130/barrel in 2Q14. Controllable items such as staff costs, sales and marketing expenses, fell -13% y-o-y from cost controls and productivity improvements achieved from having larger operating scale.
Earnings Before Interest, Tax, Depreciation, Amortisation and Rental (“EBITDAR”) dropped from RM183.5 million to RM53.5 million, while Earnings Before Interest and Tax (“EBIT”) dropped from RM46.0 million to –RM168.5 million. AAX recorded a Loss After Tax (“LAT”) of –RM140.1 million for 1H14 compared to a Profit After Tax of RM17.9 million in the first-half of 2013.
The Company continues to maintain positive operating cash flow in 2Q14 of +RM81.2 million, and +RM212.8 million for 1H14. Net Cash Flow was also positive at +RM12.8 million in 2Q14, as there were no capital expenditure incurred from financing aircraft on-balance sheet (the additional aircraft was on operating lease), no material new pre-delivery-payment financing for future aircraft, and no further capital investments in Associates. The Company expects to maintain positive operating cashflow and positive net cash flow for the full year, on the back on an expected stronger performance in the second-half of 2014.
Azran Osman-Rani, CEO of AirAsia X said, “Although our capacity expansion has put short-term pressure on earnings performance, the long-term strategic advantages are very compelling. We now have our strongest route network, with multiple cities in each of our markets, and strong frequencies that lead to convenient transfer connections. As we now have achieved overall market leadership, we have stablised our network, with quarter-on-quarter ASK growth slowing down to single-digit rates. Coupled with our position as the lowest unit-cost airline operator and leveraging on the strength of the AirAsia global brand and customer base, we have an unrivalled strong position for the future.”
“As we approach the end of the year after twelve months since we added a lot of new capacity in 4Q13, we expect RASK yields to return to positive growth and reach the levels recorded before the expansion. This in turn will return us back to profitability, particularly as global fuel prices are expected to soften, while Asian currencies are expected to stabilise. We are already seeing yields catch up in Taipei, the first route to have a doubling of capacity to twice-weekly services that commenced in July 2013.”
“Thai AirAsia X has been off on a great start, achieving a record 88% average passenger load factor in its first 3 months of operations on its inaugural Bangkok-Seoul route. The investments in international associates gives us more room for further growth and strengthens our market position in each of our destinations as customers have multiple direct flight options to choose from.”
“The 50 next-generation A330-900neo aircraft ordered will give us a huge lead over other players in this space, and ensure that we can fully realize our growth potential from the two new hubs that we have invested in, as well as other future hubs once the opportunity materialises”, concluded Azran.
Copyright Photo: Guillaume Besnard/AirlinersGallery.com. Airbus A330-343 F-WWYY (msn 1131) became 9M-XXG on delivery.
AirAsia and AirAsia X routes from Kuala Lumpur:
AirAsia X (AirAsia.com) (Kuala Lumpur) has signed a Memorandum of Understand (MOU) with Airbus for 50 A330-900neo aircraft. The agreement sees the airline become a launch customer for the latest version of the best-selling widebody. AirAsia X will also be one of the first operators of the aircraft, with deliveries to the carrier scheduled to begin in 2018.
AirAsia X (AirAsia.com) Airbus A330-343X 9M-XXD (msn 1066) OOL (Christian Laugier), originally uploaded by Airliners Gallery.
AirAsia X (AirAsia.com) (Kuala Lumpur) will add Sydney and the Kuala Lumpur route on April 1 according to Airline Route.
Copyright Photo: Christian Laugier.
AirAsia X Slide Show: CLICK HERE
AirAsia X (AirAsia.com) (Kuala Lumpur) has announced it will suspend scheduled low-fare flights to Mumbai, India from January, while the services to New Delhi, London and Paris will all cease at the end of March due to high taxes and high fuel costs.
The long-range subsidiary of AirAsia will concentrate on serving Asia and Australia. AirAsia will continue to serve India with Airbus A320s.
Read the full report from Reuters: CLICK HERE
Copyright Photo: Pedro Pics. Please click on the photo for information on this Oakland Raiders logojet.
AirAsia X Slide Show: CLICK HERE
AirAsia X (Kuala Lumpur) has informed the Ministry of Transport on its intention to drop all services to Paris, London, Mumbai and Delhi in February according to this article by Business Times.
Read the full article: CLICK HERE
Copyright Photo: Guillaume Besnard. Please click on the photo for additional information.
AirAsia X Slide Show: CLICK HERE
AirAsia Bhd’s (AirAsia Group) (Kuala Lumpur) net profit declined 23% to $56 million for the first quarter ending on March 31.
AirAsia’s Short-Haul Routes from Kuala Lumpur:
Read the full report from Bloomberg: CLICK HERE
AirAsia X (Kuala Lumpur) has placed a firm order for three Airbus A330-200s and also secured two options.
Copyright Photo: Guillaume Besnard. Please click on the photo for full details.
AirAsia X (AirAsia.com) (Kuala Lumpur) is going to launch low-fare Kuala Lumpur-Tokyo (Haneda) flights in December. The company is planning to add two additional cities.
Read the full report in The Japan Times:
Copyright Photo: Guillaume Besnard. A dramatic picture of AirAsia X’s brand new Airbus A330-343X F-WWYY (msn 1131). it will become 9M-XXG on delivery.
AirAsia X (Kuala Lumpur) hopes to add the Kuala Lumpur-Sydney route by June or July.
AirAsia X (Kuala Lumpur) and the NFL Oakland Raiders have taken a bit of a gamble with the Oakland Raiders logojet as American football is not known very well in Asia. Will it bring passengers to Oakland and vice-versa?
AirAsia X (Kuala Lumpur) will add its second European destination. One stop service to Paris (Orly) will commence next year.
AirAsia X (AirAsia.com) (Kuala Lumpur) on July 1 will start a new route linking Kuala Lumpur with Taipei. It will operate five weekly flights.