Tag Archives: AirAsia

AirAsia reports improved results in the first quarter of 2022

Capital A Berhad (formerly known as AirAsia Group Berhad) (“Capital A” or the “Group”) presents the following operating statistics for its airline business for the First Quarter of the Financial Year 2022 (“1Q2022”).

Capital A Berhad Consolidated AOCs¹ has posted another significantly improved result across key operational metrics including a healthy load factor of 76% and capacity of 4.9 million passengers carried respectively in 1Q2022. The number of passengers carried has increased by 284% to 3.7 million year-on-year (“YoY”) in 1Q2022 leading to a 9 percentage points (“ppts”) improvement in load factor. The Group introduced additional capacity of 238% YoY to support the surge in demand, alongside relaxed travel restrictions across the Group. As a result, Available Seat Kilometres (“ASK”) soared by 223% and Revenue Passenger Kilometres (“RPK”) jumped by 264% YoY, primarily attributable to the strong domestic travel rebound and the gradual further easing of travel restrictions in 1Q2022.

For AirAsia Malaysia, the number of passengers carried and the capacity improvement jumped 464% and 455% respectively, compared to the same quarter in the previous year, off the back of the resumption of a significant number of additional domestic flights and the relaunch of numerous domestic routes to connect people between major cities, particularly during the festive season. In 1Q2022, the load factor increased by 1 ppt YoY to 74%. ASK jumped 475% and RPK jumped 476% YoY. These very promising achievements were driven by added frequencies of domestic flights in line with increased demand and were also attributed to the promotional campaigns that took place in 1Q2022.

AirAsia Indonesia also achieved a much improved load factor of 76% in 1Q2022, which surged 20 ppts YoY. Passengers carried and capacity improved by 126% and 141% quarter-on-quarter (“QoQ”), respectively, off the back of additional frequency added for domestic flights, particularly Jakarta to Denpasar and between Jakarta and Medan, to meet huge pent-up demand. The RPK surged 129% to 436 million from 190 million QoQ and increased 22% YoY from 357 million in the quarter.

AirAsia Philippines has continued to record the Group’s highest quarterly load factor at 86%, which rose by 12 ppts YoY, uninterrupted by the steep rise of Omicron variant cases in the Philippines during the quarter. In 1Q2022, the number of seats sold and capacity increased 233% and 186% respectively, compared to the same period last year. Similarly, ASK and the number of flights flown rocketed 203% and 186% YoY, with the support of the huge summer demand following the Philippines Government’s confirmation of further relaxed travel protocols.

In 1Q2022, AirAsia Thailand carried 1.45 million passengers, up 48 ppts YoY, an impressive increase over the past two consecutive quarters, mainly due to a strong recovery in travel demand and the easing of the entry rules as well as the reopening of the Thailand Pass (Test & Go). Noticeably, international tourist arrivals to Thailand increased as a consequence. Furthermore, AirAsia Thailand has increased its flight frequency and routes to cater for the evolving resurgence in travel demand, eventuating in a 32% growth in flights flown to 11,002 flights, in part, from a resumption of international flights. Similarly, the ASK and the seating capacity also improved by 34% on a robust rebound. Moreover, AirAsia Thailand has reallocated its capacity and flights to align with the reviving demand. As a result, the load factor in the reporting quarter was recorded at 73%, rising 7 ppts from the same period last year.

Capital A Berhad Consolidated AOCs – Malaysia, Indonesia & Philippines
1st Quarter 2022 Operating Statistics

Note: (i) The fleet count excludes:
– Two (2) A320 aircraft leased to a third party airline

Malaysia
1st Quarter 2022 Operating Statistics

Note: (ii) The fleet count excludes:
– Two (2) A320 aircraft leased to a third party airline

Indonesia
1st Quarter 2022 Operating Statistics

Philippines
1st Quarter 2022 Operating Statistics

Thailand
1st Quarter 2022 Operating Statistics

1. Number of earned seats flown. Earned seats comprise seats sold to passengers (including no-shows)
2. Number of seats flown
3. Number of Passengers Carried as a percentage of Capacity
4. Available Seat Kilometres (ASK) measures an airline’s passenger capacity. Total seats flown multiplied by the number of kilometres flown
5. Revenue Passenger Kilometres (RPK) is a measure of the volume of passengers carried by the airline. Number of passengers multiplied by the number of kilometres these passengers have flown
6. Number of flights flown
7. Number of aircraft including spares

¹ Capital A Berhad Consolidated AOCs refers to AOCs whose financial and operational results are consolidated for financial reporting purposes and these are the Malaysian, Indonesian and Philippines AOCs.

History of AirAsia liveries:

 

AirAsia secures CAAM license to fly drones

AirAsia has announced that it has secured its Certificate of Approval (COA) from the Civil Aviation Authority of Malaysia (CAAM), to conduct remote drone pilot training. The classroom training will be conducted at AirAsia Academy located in KL Sentral and practical training will be conducted at the YMCA Kuala Lumpur field, adjacent to KL Sentral.

Chief Safety Officer, AirAsia Group, Captain Ling Liong Tien said: “We are thrilled to be the first in Malaysia to win approval from CAAM for the accreditation of our remote pilot training organization (RPTO). The team has been working closely together with CAAM for months. We thank the regulator for their ongoing support and really look forward to starting our first class in coming weeks.

“The idea behind becoming an RPTO is to support the industry by providing quality remote pilot training leveraging our strong aviation background and decades of expertise. The UAS (unmanned aircraft system) has become an important element in many industries driving cost effectiveness and numerous efficiencies.

“Our commitment is to develop a strong foundation, supported by our existing robust safety management system, crew resource management and human factors training programs along with the remote pilot training modules – both in the class and out in the field,” he said.

The latest development supports the upcoming drone pilot project for the delivery of goods from airasia’s e-commerce platforms, using automated drones.

The approved training courses and links to apply are listed below:

  1. RCOC-B (Remote Pilot Certificate of Competency – Basic) (5 days) here

  2. RCOC Module 1 (EVLOS) (Extended Visual Line of Sight) (2 days) here

  3. SMS (Safety Management System) (3 Days) here

  4. CRM (Crew Resource Management) (2 Days) here

AirAsia Group reports a loss in the third quarter, launches Teleport

AirAsia Group Berhad reported its financial results for the quarter ended September 30, 2021 (“3Q2021”).

Unaudited Consolidated Third Quarter 2021 Results of AirAsia Group Berhad

The Consolidated Group posted 3Q2021 revenue of RM296 million, lower by 37% year-on-year (“YoY”) and 20% quarter-on-quarter (“QoQ”). Aviation revenue declined 70% YoY and 37% QoQ as travel demand was constrained by limited available flights caused by the lockdown imposed in Malaysia, since January 2021. Digital businesses reported stronger revenue, up 141% YoY led by contributions from Teleport, which tripled its revenue YoY driven by strategic growth in its cargo network.

EBITDA loss was RM281 million for the quarter, which narrowed by 38% YoY. Fixed costs were successfully reduced by 23% YoY, primarily attributed to lower staff costs and lower other operating expenses. The Consolidated Group ended the quarter with an improved cash position of RM401 million due to cash proceeds from Fly Leasing, funds from the convertible loan note into BigPay and tight ongoing control of costs. Net operating cash flow burn was lower YoY, averaging RM68 million per month in 3Q2021.

The airasia Super App reported 7% YoY revenue growth, attributed to new product offerings and commissions. BigPay posted significant growth in revenue, up 26% YoY driven by payments and remittances. Teleport’s revenue tripled YoY due to strategic growth of its cargo network to establish its presence in the market.

The Consolidated Group posted a 3Q2021 Net Loss Before Tax of RM1.11 billion, which narrowed by 4% YoY. Active capacity management and concentration on flying the most profitable routes as well as lease restructuring, asset optimisation, targeted cost control and the absence of any fuel swap loss, resulted in a 65% reduction in aviation operating expenses YoY. Overall, the loss was attributed to a shortfall in revenue and a foreign exchange loss of RM217 million in comparison to a foreign exchange gain of RM44 million in 3Q2020.

Operating Performance

AirAsia Philippines outperformed AirAsia’s other airline entities during the third quarter of 2021, reporting stronger YoY and QoQ key operational metrics. AirAsia Philippines demonstrated a strong performance in 3Q2021, posting 167% growth in the number of passengers carried YoY and a 5% increase QoQ. Load factor was healthy at 77%, attributed to active capacity management.

Revenue per ASK (“RASK”) for the Consolidated Group improved by 48% YoY to 21.83 sen during the quarter, while load factor was firm at 67%, 1 ppt higher YoY, supported by active capacity management.

Cost Performance

Airline operating expenses for 3Q2021 reduced by 65% YoY while fixed costs were efficiently reduced by 23% YoY and 15% QoQ. Airline staff costs declined the most by 38% YoY and 4% QoQ, contributed by headcount rationalization, salary cuts and natural attrition. Other operating expenses reduced by 11% YoY and 33% QoQ due to strict cost control measures implemented for marketing, rental and IT spend.

On the airline performance results and outlook, Group CEO of AirAsia Aviation, Bo Lingam said:

“Load factor for the Group remains healthy in 3Q2021 at 67%, up 1 ppt attributed to active capacity management to match demand. Growth during the quarter was driven by AirAsia Philippines which grew its passengers by 167% YoY and pushed the load factor up to 77%.

“AirAsia Malaysia, AirAsia Indonesia and AirAsia Thailand experienced subdued momentum QoQ due to limited operations as travel was restricted for the most part of the quarter. Nonetheless, in a month-on-month (MoM) breakdown, AirAsia Malaysia more than doubled the number of passengers carried in September as compared to August, which resulted in a 13 percentage point (“ppt”) higher load factor improvement. The encouraging growth was primarily driven by the opening of the Langkawi travel bubble from 16 September. Since then, we have observed a continuous improvement in bookings, as travel demand gradually recovers following the authorization of nationwide interstate and some limited international travel, since 11 October onwards.

“Aside from Malaysia, recent positive developments for air travel across Thailand, Indonesia and the Philippines have contributed to a significant increase in seats sold for immediate and near-term travel, in line with our expectation of stronger bookings for spontaneous travel due to pent-up demand. The upcoming year-end holiday season will further spur air travel demand, especially in the visiting friends and relatives (VFR) as well as the leisure and spontaneous travel markets. We expect to see a continuation of this upward trend throughout 4Q and well into 2022 as global travel restrictions continue to ease. Our aim is to fly 60% of our pre-Covid domestic flight capacity by December 2021.

“We continued to improve our cost base through stringent cost containment measures. Our 3Q2021 fixed costs reduced 23% YoY, as airline staff costs were down 38% YoY due to headcount rationalization & attrition. Other operating expenses reduced by 11% YoY and another 33% QoQ due to strict cost control measures implemented for marketing, rental and IT spend. We have been reporting a zero fuel swap loss since 2Q2021.

“Many countries have started to reopen and allow vaccinated travelers in. Most recently, the governments of Malaysia and Singapore announced the commencement of the Vaccinated Travel Lane (VTL), which paves the way for a gradual flight resumption between these two countries. We look forward to kick starting our Kuala Lumpur-Singapore flights at the end of this month and we are hopeful of the establishment of similar initiatives in other key markets in the near future.

“We continue to work closely with the authorities to ensure that the highest standards of health and safety are maintained at all times. In addition, we have also implemented numerous contactless innovations and procedures to provide a more hygenic and and seamless travel experience for our guests and to help restore consumer confidence in air travel.

“With our robust short haul business model, lean operations, contactless procedures, optimized network, strong dominance in Asean combined with pent-up demand, vaccines and travel lane formations, we remain confident of a fast recovery upon the further relaxation of travel restrictions in the near future.”

On Asia Digital Engineering (ADE)’s performance and outlook, CEO of ADE, Mahesh Kumar said:

“Asia Digital Engineering is actively ramping up its service offerings to become the leading maintenance repair and overhaul (MRO) provider in Asia. In 3Q2021, ADE obtained foreign approval from the Indonesian authority to conduct base maintenance works in Malaysia. ADE also received the relevant approvals to carry out base maintenance services for the A320neo aircraft type in Malaysia. While rapidly expanding its service capabilities, ADE expects to receive a number of additional approvals by the end of 2021. To further support our expansion plan, we have embarked on a fundraising exercise which is expected to complete by the end of first half next year. Having successfully completed the first cargo-on-seat conversion for Teleport and carried out the first ka-band installation for airasia wifi, ADE is actively exploring strategic partnerships and collaborations with service providers, including an inflight broadband solution, to further enhance its position as a one-stop solution for all MRO requirements.”

On airasia Super App’s performance and outlook, CEO of airasia Super App, Amanda Woo said:

“It’s a new era for the airasia Super App. We have just reached our one year milestone in October and we are on the right track to becoming the all in one travel and lifestyle platform of choice in Asean. We have launched many products and services in our first year, starting in Malaysia and we remain committed to bring the new airasia way of life to our many millions of users across the region in the near future. In 3Q2021, we acquired the Gojek business in Thailand for a share swap consideration, which valued airasia superapp at US$1 billion and kick started the rollout of our products and services in the Kingdom.

“We also launched airasia ride in Klang Valley, which gained substantial traction and closed more than 40,000 bookings within the first month. Soon after, we expanded airasia ride to Langkawi and Penang, and passengers can now book their rides while they are on our flights that are equipped with airasia wifi.

“Airasia Super App revenue increased by 7% YoY while our average monthly active users increased by 40% QoQ, driven by food and ride offerings.

“The aim is to deliver a seamless one stop travel and lifestyle experience for our users. As we continue to grow and evolve based on consumer demand, we revamped airasia fresh into airasia grocer and expanded both airasia grocer and airasia food into more cities. Our new product, airasia money, gained further traction with digital car insurance offerings.

“As expected, our Travel vertical saw higher bookings as travel restrictions were lifted. In September, the Travel vertical recorded 400% higher transaction volume MoM drive by Flights, Hotels and SNAP. Last month, we celebrated the gradual reopening in travel by strengthening our OTA positioning, connecting users to 700 international airline brands flying to over 3,000 destinations and promoting more than 300,000 hotels worldwide through the convenience of our single app. Just last week, we launched FACES, which is truly a game changer for fully integrated contactless travel and lifestyle experiences. It is an exciting time for us and we look forward to launching more products, partnerships and collaborations for the benefit of our users.”

On Teleport’s performance and outlook, CEO of Teleport, Pete Chareonwongsak said:

“Teleport’s revenue tripled YoY and increased 2% QoQ, lifted by a strategic growth in its cargo network. Delivery volume grew 53% YoY and 49% QoQ to more than 300,000 in 3Q2021. Margins improved for the quarter through active optimization of the cargo network.

Most recently, Teleport (Kuala Lumpur) launched its first dedicated 737-800 freighter, which will accelerate its goal to shift from a pure air freight logistics player to a complete multi-modal operator.

Stationed in Bangkok, the freighter allows us to be able to reach key markets including Hong Kong, Shanghai, Chennai, Mumbai and all other major destinations in Southeast Asia. We are fully committed to meet growing air cargo needs in the region by enhancing our capabilities and strengthening our position in the market. We are also in the midst of our first fundraising initiative which is expected to complete by the end of the year.”

Teleport, the logistics venture of airasia Digital, further reinforces its position as a formidable regional player in the cargo and logistics business with the launch of its dedicated 737-800 Freighter on November 3, 2021, including the unveiling of its unique livery.

The new aircraft’s livery design reflects the brand colors of Teleport as the dedicated freighter prepares for its first flight across key routes in Asia. The new design represents Teleport’s service philosophy, signaling its commitment towards further establishing Teleport and the AirAsia Group as amongst the Top 3 cargo operators by capacity in Asean.

The addition of the dedicated freighter, brings Teleport’s current active fleet to a total of 252 planes (including AirAsia Group’s passenger planes) and will enable greater consistent capacity on key air cargo routes across Southeast Asia.

Since the start of 2020, Teleport has set out to build a cargo-only network across the key air cargo lanes in the region to cater for the increasing e-commerce and general cargo demand. Teleport will continue to enhance its capabilities to compete in the fast growing, cargo and e-commerce markets across Asean.

On the group’s outlook, CEO of AirAsia Group Berhad, Tan Sri Tony Fernandes said:

“As a Group, we have taken advantage of the downtime in flying to tap new revenue streams and fully transform ourselves into an investment holding company with a portfolio of synergistic travel and lifestyle businesses. In just over a year and a half, Asia Digital Engineering, Airasia superapp, Teleport and BigPay have gained significant traction and established a strong presence in our key markets. As the world continues to open up and a strong recovery in air travel is on the horizon, we have ensured our portfolio companies are given autonomy to run their business independently to encourage innovation and ensure speed to market through even higher efficiency. Together as a group, each of our businesses continue to leverage significant data and industry leading technology to deliver the best value at the lowest cost, supported by one of Asia’s leading brands that remains committed to serving the underserved.

“As for funding, we are pleased to share that we have received shareholder’s approval for the proposed renounceable rights issue of up to RM1 billion, at the Extraordinary General Meeting held on 11 November 2021. We expect to complete the exercise by the end of this year. We have also completed two batches of lease restructuring and expect to complete the full exercise by the end of 2021. This will positively result in a lower lease rental per aircraft in the future. Additionally, we have received the approval from Danajamin Nasional Berhad (Danajamin) for an 80% guaranteed loan of up to RM500 million under the Danajamin Prihatin Guarantee Scheme and an approval from a foreigner lender for a US$150 million loan facility of which US$100 million has been drawn down. While we continue to evaluate further funding, potential monetization and other corporate exercises, as for now we expect to have sufficient liquidity until year end and throughout 2022.”

AirAsia is interested in a potential Airbus A321neo freighter

From Reuters:

“AirAsia Group Bhd is in talks with Airbus SE about its interest in the manufacturer developing a new freighter version of its A321neo passenger plane.

AirAsia would seek to convert a “meaningful chunk” of its 362 orders for the passenger version of the A321neo narrow body to a dedicated freighter.”

More:

https://www.reuters.com/business/cop/airasia-interested-potential-airbus-a321neo-freighter-exec-2021-11-03/

AirAsia restructures its airlines under AirAsia Aviation Limited

AirAsia made this announcement:

As AirAsia’s rapid transformation from an airline into a digital travel and lifestyle services group continues to gain strong momentum, the holding company for the airline Group has been officially renamed AirAsia Aviation Limited.

Bo Lingam, formerly President (Airlines) for AirAsia Group, takes over as Group CEO of AirAsia Aviation Limited, overseeing the four airlines in the Group (AirAsia Malaysia, AirAsia Philippines,  AirAsia Thailand and AirAsia Indonesia).

AirAsia Group Berhad (AAGB) is the investment holding company for the eight digital portfolio companies that leverage data and technology to deliver the best value at the lowest cost.  AAGB’s comprehensive portfolio includes AirAsia Aviation, the airasia Super App, cargo and logistics venture Teleport, BigPay financial services, the edutech arm AirAsia Academy, engineering company Asia Digital Engineering, ground services division GTR and the restaurant chain and food group called Santan.

Group CEO of AirAsia Aviation Limited Bo Lingam

Group CEO of AirAsia Aviation Limited Bo Lingam

Group CEO of AirAsia Aviation Limited Bo Lingam said: “This structural change helps facilitate strong projected growth in both airline and non-airline portfolio businesses.

“The AirAsia Aviation Limited entity holds our existing airline investments and paves the way for new airline ventures to be formed in due course. We have also established a new AirAsia Consulting division tasked at reviewing new airline partnerships and franchise opportunities.

“By creating this airline holding company we can focus on continuing to be the world’s best low cost airline. We have spent the past 18 months reviewing every aspect of the operation to ensure that our airlines will return stronger than ever before. The world is finally opening up and we foresee a V-shaped rebound in air travel in the near future.  In Malaysia, we are already seeing huge pent up demand for air travel since the government’s recent announcement of the resumption of interstate travel on 11 October. We are operating over 60 daily flights to 16 key leisure destinations and more frequencies and routes will continue to be added in response to significant consumer demand.

“Pleasing progress is also underway in our other airlines in Thailand, Indonesia and the Philippines as services are resuming in line with accelerated vaccination rates and the easing of travel restrictions in our key markets.

“To ensure the safety of our staff and guests, we are also implementing stringent health and safety measures, with the highest standards of hygiene.

“We look forward to the opening of international borders as the next key milestone. We will continue to review new markets to operate from in the future, like Cambodia for example, when we can connect Asean once again with the best value fares and lifestyle offerings.”

AirAsia converts its remaining Airbus A320 aircraft orders to the A321neo

AirAsia Group has reaffirmed its commitment to transform its present mainly-A320 aircraft fleet to the higher-capacity, more fuel-efficient Airbus A321neo with the signing of an amendment agreement with Airbus S.A.S., in which AirAsia will convert its remaining A320 aircraft orders to the A321neo.

The contract marked AirAsia’s commitment to purchase the largest model in the best-selling A320 Family. Seating up to 236 passengers in a single class layout, the A321neo will enable the airline to increase capacity while benefiting from the lowest operating costs in the single aisle category. Equipped with Airbus’s Space-Flex Cabin that allows for a more efficient configuration of the cabin space, the A321neo delivers an optimal passenger comfort and efficiency.

With the conversion of its remaining 13 A320 undelivered aircraft to the A321neo, AirAsia now has a total order of 362 A321neo aircraft that will be allocated based on demand among its airlines within the Group, with deliveries up until 2035, as agreed between AirAsia and Airbus.

AirAsia received its first A321neo in November 2019 and currently has a total of 4 A321neo in service.

At present, the Group has a total fleet size of 211 aircraft comprising 169 A320, 38 A320neo and 4 A321neo aircraft.

Thai AirAsia is confident in air travel recovery after the Group reports a large loss in the second quarter

AirAsia (Thai AirAsia) Airbus A320-251N WL HS-CBF (msn 7949) DPS (Pascal Simon). Image: 954967.

AirAsia (Thailand) issued this statement:

AirAsia is confident air travel sentiment will recover especially during the year-end holiday period following a government announcement relaxing travel restrictions, and supported by  its own health and safety enhancements.

Upon resuming service on 3 September, 2021, the airline has observed that its direct flights from Don Mueang to Chiang Mai, Chiang Rai and Hat Yai to be the top 3 most booked and flown routes, with an average of 80% of available seats booked  for 3-15 September 2021. (This is based on the 75% maximum capacity per flight allowed by the Civil Aviation Authority of Thailand).

Flights to northeastern destinations of Khon Kaen, Ubon Ratchathani, Udon Thani and Nakhon Panom have also been well received. In anticipation of higher demand, AirAsia has plans to increase its flight frequencies to these destinations, with additional direct flights and regional connections especially for the year-end holiday season.

AirAsia Thailand Chief Executive Officer, Mr. Santisuk Klongchaiya, said  AirAsia has resumed  11 routes as part of its gradual return to domestic service.  The carrier has been flying direct from Don Mueang to Chiang Mai, Chiang Rai, Hat Yai, Nakhon Si Thammarat, Narathiwat, Khon Kaen, Udon Thani, Ubon Ratchathani, Nakhon Panom and Roi Et since 3 September and began flying direct to Phuket on 8 September.

“We have seen a very positive response within the first three days of returning to service especially for popular destinations such as Chiang Mai, Chiang Rai and Hat Yai, which achieved load factors as high as 90% and we foresee the demand to continue on a good momentum. These are very encouraging  signs  for the aviation business and tourism industry, which we expect to begin recovering very soon,” Mr. Santisuk said.

AirAsia is keeping a close eye on the situation and is always committed to playing an active and positive role in the recovery of the domestic market by  adding more  routes and increasing flight frequencies in time for the high season in the fourth quarter.

A steady decline in the number of COVID-19 infections and wider vaccination rates across the Kingdom are key catalysts for the recovery.  To further boost demand, the airline is offering promotions and campaigns to give travelers the best value and flexible travel deals.

Most importantly, AirAsia is maintaining its stringent health and safety measures, including vaccinating all of its service staff, who will also regularly be tested for COVID-19, requiring guests to wear a face mask throughout their journey, performing regular disinfection of cabins and contact surfaces, and strictly adhering to all guidelines and regulations set by health and civil aviation authorities, including 75% maximum capacity allowed per flight and transfer shuttles to a maximum 50 people per trip. All AirAsia aircraft are fitted with hospital-grade HEPA filters that are able to filter out 99.99% of dust particulates including bacteria and viruses from the cabin air.

Related to this, AirAsia Group Berhad reported its financial results for the quarter ended June 30, 2021 (“2Q2021”).

Unaudited Consolidated Second Quarter 2021 Results of AirAsia Group Berhad

The Consolidated Group posted 2Q2021 revenue of RM371 million, higher by 161% year-on-year (“YoY”) and 24% quarter-on-quarter (“QoQ”). Aviation revenue declined 8% QoQ but increased 176% YoY off a low base due to the fleet hibernation for the most part of 2Q2020 caused by the onset of the pandemic. Digital businesses reported stronger revenue, up 147% YoY led by contributions from Teleport, which tripled its revenue YoY driven by a higher number of cargo only flights and deliveries.

EBITDA loss was RM207 million for the quarter, which narrowed by 70% YoY and 5% QoQ. Fixed costs were successfully reduced by 15% YoY despite a low base in 2Q2020, primarily attributed to lower staff costs. Net operating cash flow burn was lower QoQ, averaging RM62 million per month in 2Q2021.

The airasia Super App reported strong revenue growth of 39% YoY, attributed to new product offerings and commissions. BigPay posted significant growth in revenue, up 56% YoY driven by payments and remittances. Teleport’s revenue tripled YoY due to a higher number of cargo only flights and significant delivery demand volume through scheduled cargo networks connecting India, China, Korean and Japan through Asean.

The Consolidated Group posted a 2Q2021 Net Loss After Tax of RM720 million, which narrowed by 38% compared to the Net Loss After Tax of RM1.2 billion in 2Q2020. Although aviation revenue was much higher by 176% YoY, active capacity management and concentration on flying the most profitable routes as well as lease restructuring, asset optimisation and targeted cost control resulted in a 54% reduction in aviation operating expenses YoY. The absence of fuel swap loss for the quarter also contributed to the better performance.

Operating & Market Share Performance

Key operational metrics improved significantly YoY for all four entities, on the back of a low base in 2Q2020. As for QoQ performance, AirAsia Philippines progressed steadily with a 2% increase in the number of passengers carried and an improvement of 4 percentage points (“ppts”) in load factor, to reach a commendable 78%, while AirAsia Indonesia’s load factor increased by 11 ppts. Revenue per ASK (“RASK”) for the Consolidated Group was flat at 15.93 sen during the quarter, while load factor was firm at 68%, 9 ppts higher YoY, supported by active capacity management.

Cost Performance

Airline operating expenses for 2Q2021 reduced by 54% YoY while fixed costs were efficiently reduced by 15% YoY despite a low base in 2Q2020. Reduction was flat on a QoQ basis. Airline staff costs declined the most by 48% YoY and 19% QoQ, contributed by headcount rationalisation, salary cuts and natural attrition. User charges and other related expenses were reduced by 53% in line with lower traffic. The adoption of contactless procedures and digital check-in processes also aided to result in lower ground-handling costs.

On the airline performance results and outlook, President (Airlines) of AirAsia Group Berhad Bo Lingam said:

“The Group posted a healthy load factor of 68% during the quarter, up 9 ppts attributed to active capacity management to match demand. This is led by AirAsia Philippines with 78% load factor during the quarter. AirAsia Malaysia, AirAsia Indonesia and AirAsia Thailand experienced subdued momentum QoQ due to rising Covid-19 cases in their respective domestic markets. Nonetheless, passenger numbers improved YoY with AirAsia Malaysia reporting a 64% increase YoY while AirAsia Indonesia, AirAsia Philippines and AirAsia Thailand each increased by more than 100% YoY.

“We continued to see positive outcomes from our stringent cost containment measures. Our 2Q2021 fixed costs reduced 15% despite coming off a low base. On a QoQ basis, fixed costs were flat after a consistent QoQ downtrend since the first Covid wave in late 1Q2020. Airline staff costs were down 48% YoY and another 19% QoQ due to headcount rationalisation & attrition. We reported zero fuel hedging losses, which will remain nil in the upcoming quarters as it has been fully restructured.

“AirAsia Thailand resumed 11 domestic routes in early September following the relaxation of travel restrictions by the authorities, operating under strict SOPs and with enhanced hygiene measures in place. Meanwhile, AirAsia Indonesia has remained in hibernation mode since July 2021, adhering to strict containment efforts enforced by the government due to the rising number of infection cases as well as significantly subdued demand for travel. AirAsia Indonesia was recovering well prior to the hibernation, achieving as high as 70% of pre-Covid domestic capacity levels in May 2021.

“On a positive note, AirAsia Malaysia welcomes the government’s announcement of the Langkawi travel bubble opening mid September. We expect all our airline entities to see a gradual pick up in domestic operations in the fourth quarter, following the easing of travel restrictions in line with the increase in vaccination rates in all of our key markets.

“Quick and efficient vaccination rollouts in our key operating markets will ensure a strong recovery as soon as travel restrictions allow. Malaysia is on track to have vaccinated 80% of its population by the end of this year. Singapore has fully vaccinated 80% of its population while other Asean countries are progressing favourably. Across the world, many countries are already allowing vaccinated travellers in. With the accelerated vaccine rollouts across Asean, we expect to see more vaccinated travel lanes and vaccine bubbles forming which will boost a V shaped resumption of air travel in the near future.

“Importantly, the health and wellbeing of our staff and guests remain our top priority. Our operating crew and frontline staff are 100% fully vaccinated and ready to serve our guests with stringent safety and hygiene standard operating procedures in place. We have also adopted numerous contactless procedures through technological innovations to ensure a seamless travel experience.

“We have unwavering confidence that our robust short haul business model, lean operations, contactless procedures, combined with pent-up demand, vaccines and travel bubble formations, will ensure a quick recovery upon the relaxation of travel restrictions in the near future. People are craving to travel again and we expect to see a strong resurgence in the visiting friends and relatives (VFR) as well as the leisure and spontaneous travel markets first.”

On Asia Digital Engineering (ADE)’s performance and outlook, CEO of ADE, Mahesh Kumar said:

“Asia Digital Engineering (ADE), AirAsia’s aircraft maintenance, repair and overhaul (MRO) arm, is well on the way to revolutionise and dominate the aircraft MRO market in Asia, driven by our experienced workforce of more than 15 years managing AirAsia’s fleet, lower cost base combined with our commitment to delivering the highest quality outcomes, diverse capabilities, state-of-the-art facilities and strong relationship with suppliers. This year, ADE has successfully obtained base and line maintenance approvals in Malaysia, received foreign approvals from Indonesian and Indian authorities for works to be carried out at ADE’s facilities, secured three external clients and converted passenger planes to freighter planes. 2022 will be about expanding our business to attract more third party airlines. We are focused to continue expanding our capabilities by adding at least 14 more workshops, broadening the approvals for line & base maintenance and ramp up the activities on the digital front by developing the best-in-class applications for both airlines & MRO operations. Competitive pricing, faster turnaround and end-to-end support coverage will shape ADE to be the preferred service provider in the region.”

On Santan’s performance and outlook, General Manager of Santan, Catherine Goh said:

“Santan, our in-flight catering turned Asean restaurant brand, operates 12 restaurants across Klang Valley. Two outlets, Midvalley and Sunway Pyramid are owned while the remaining 10 are franchised. Plans to take the Santan brand to the international stage, starting with Cambodia, Thailand, Singapore and China, have been pushed to 2022 as we await the reopening of borders and lifting of travel restrictions. In the meantime, we remain committed to expanding our restaurant network across Malaysia, with upcoming stores to be located in Penang, Ipoh, Melaka, Seremban, Sabah and Sarawak by the end of the first quarter next year.”

On airasia Super App’s performance and outlook, CEO of airasia Super App, Amanda Woo said:

“Delivering the best value and choice for consumers underpins our brand and our continuous ramp up of the airasia Super App as an all in one travel and lifestyle platform is showing strong results. Driven by new products and commissions, revenue for the quarter was up 39% YoY. In 2Q2021, we have successfully launched airasia beauty in Malaysia and Indonesia, recognising the high demand for e-commerce beauty and skincare products. We have also recently expanded airasia food to Penang in May, Kota Kinabalu and Johor Bahru in July, Melaka and Bangkok in August.

“We reached a significant milestone in July this year, when we acquired the Gojek businesses in Thailand for a share swap consideration, which valued airasia superapp at US$1 billion. We are thrilled with this partnership which provides a strong jump start into the Thailand delivery market and we remain committed to leveraging the existing ecosystem while adding on new offerings. On that note, last month we launched our first ever e-hailing services as our latest product offering called airasia ride, which is now available for bookings in Klang Valley, with plans for further expansion in Malaysia and across Asean.”

On Teleport’s performance and outlook, CEO of Teleport, Pete Chareonwongsak said:

“Teleport’s revenue increased 67% QoQ and tripled YoY, boosted by a higher number of cargo only flights and significant delivery demand volume through scheduled cargo networks connecting India, China, Korean and Japan through Asean. During the quarter, Teleport obtained the Postal and Courier License from the Malaysian Communications and Multimedia Commission (MCMC) which authorised Teleport to operate domestic and international courier services in Malaysia. In order to meet the higher demand, Teleport has since modified two cargo-only A320 passenger planes and will soon induct our first dedicated freighter into our growing fleet. In August, Teleport successfully acquired delivery platform DeliverEat for US$9.8 million and welcomed prominent investors, including venture capital firm Gobi Partners onboard, valuing Teleport at US$300 million. In order to reach our goal to move anything across Asean better than anyone else within 24 hours, Teleport is actively establishing partnerships with other airlines to grow its cargo network, while strengthening its delivery network with end-to-end infrastructure which includes our pool of delivery drivers and riders currently numbered at 15,000 and growing.”

On BigPay’s performance and outlook, CEO of BigPay, Salim Dhanani said:

“BigPay’s revenue was 56% higher YoY, driven by higher payments and remittances. During the quarter, BigPay introduced an all-in-one lifestyle insurance service, providing coverage with premiums from as low as RM30 annually, and officially applied for a digital bank license in Malaysia with a consortium of strategic partners. As for funding, BigPay secured financing of up to US$100 million from SK Group, which is a strong testament to BigPay’s credibility and commitment to becoming a leading challenger bank across Asean. BigPay is focused on developing microlending, transactional lending, saving and investment products as well as rolling out its existing payments and remittance products to other Asean countries.”

On the group’s outlook, CEO of AirAsia Group Berhad, Tan Sri Tony Fernandes said:

“Our transformation is over and AirAsia Group Berhad is now an investment holding company with a portfolio of synergistic travel and lifestyle businesses that leverage data and technology to deliver the best value at the lowest cost, supported by strong data and one of Asia’s leading brands that remains committed to serving the underserved.

“Innovation has always been in our DNA and we will continue to develop and expand our products and services to meet consumer demand in all of our key markets.

“We continue to evaluate funding, potential monetization and other corporate exercises to ensure sufficient liquidity for the Group. By the end of the third quarter of 2021, we will have completed two batches of lease restructuring and expect to complete the full exercise by the end of 2021. In August, BigPay secured up to US$100 million in financing led by SK Group. We have also proposed a renounceable rights issue of up to RM1.0 billion, which we expect to be finalised by the end of this year, subject to SC and Bursa’s approval, as well as shareholders’ approval at an Extraordinary General Meeting to be convened. Positive discussions for raising additional new capital for airlines, Asia Digital Engineering and our digital businesses are ongoing. Through all of our strategic fundraising exercises, we expect to have sufficient liquidity for 2H2021 and throughout 2022.”

More on this story:

https://www.msn.com/en-my/money/topstories/airasia-says-transformation-into-digital-travel-and-lifestyle-group-complete/ar-AAOdNMw?ocid=BingNewsSearch

Top Copyright Photo: AirAsia (Thai AirAsia) Airbus A320-251N WL HS-CBF (msn 7949) DPS (Pascal Simon). Image: 954967.

Thai AirAsia aircraft slide show:

Auditor: AirAsia’s future in “significant doubt”

The external auditor of AirAsia (Ernst and Young) has raised significant doubts about budget airline AirAsia as a going concern.

According to the report, AirAsia’s current liabilities already exceeded its current assets by 1.84 billion ringgit ($430 million; £340 million) at the end of 2019, before the start of the COVID-19 pandemic.

Trading in AirAsia were suspended.

Read more from the Nikkei Asian Review.

AirAsia issued this statement:

AirAsia Group Berhad wishes to draw attention to our latest update where AirAsia’s external auditors, Messrs Ernst & Young PLT issued an unqualified audit opinion with an emphasis of matter on material uncertainty relating to going concern in respect of the Company’s audited financial statements for the financial year ended December 31, 2019.

The unqualified audit opinion states that the financial statements of AirAsia for the financial year ended December 31, 2019 are true and fair and in compliance with financial reporting standards and statutory requirements, in all material aspects.

The emphasis of matter highlights that there are significant uncertainties with respect to the Company’s ability to continue as a going concern as a result of the unprecedented COVID-19 pandemic. Nevertheless, it is important to note that the financial statements have been prepared on a going concern basis, as the Board of Directors is confident of the successful continuation of the business, in conjunction with the actions undertaken by the governments of the operating entities, outcome of ongoing discussions with financial institutions and investors to obtain required funding and implementation of management’s action plans, in response to the conditions above.

In this regard, the auditors’ report should be read in full and can be found in the annual audited accounts that is available on the Company’s Investor Relations website.

Domestic rebound demand is strong; Optimistic of re-opening of international travel

AirAsia Group Berhad CEO, Tan Sri Tony Fernandes said “The first half of 2020 has been extremely challenging. However, in recent weeks, countries around the world have resumed domestic travel and are gradually reopening international borders in recognition that air transport provides the connectivity that is essential for the resumption of economic activities. The formation and discussion of “travel bubbles” and “green lanes”  with key economic partners with a low infection rate and proven pandemic curbing systems, is a step in the right direction.

“As domestic travel is now allowed in Malaysia, Thailand, Indonesia, India and the Philippines, we have been resuming our flights on a staggered yet steady basis since late May. In support of governments’ efforts to revive domestic tourism and ultimately stimulate economic recovery, AirAsia has aggressively launched large-scale promotions and sales campaigns. I am encouraged by the higher-than-anticipated sales this has generated.  On July 7, 2020 we registered our highest post-hibernation sale with 75,000 seats sold in a single day, reflecting pent-up demand and signalling green shoots of recovery. We also sold over 200,000 AirAsia Unlimited Passes since its recent launch for domestic Malaysia, domestic Thailand and AirAsia X.

“Positive trends in our flight bookings and load factors are additional signals of a better second half of the year. In June, our group-wide load factor was 60% with AirAsia Malaysia’s load factor reaching 65%. For July, we expect to achieve a higher load factor of 70% despite tripling our capacity month-on-month to cater to the increased demand.

“Teleport, the profitable technology-meets-logistics venture of AirAsia, accelerated its regional growth despite a challenging environment, growing 49% year-on-year in the first quarter of 2020. This growth was supported by a strong emphasis on transporting medical aid and critical supplies at a time of need. In addition, despite the complete hibernation of the airline group, Teleport pivoted from delivering cross-border e-commerce to last mile deliveries, delivering more parcels, restaurant orders, and fresh produce during the movement control period than in the previous 12 months collectively. With the launch of Freightchain, the world’s first digital cargo platform built on blockchain, the re-launch of OURSHOP as an e-commerce marketplace to support the local businesses we love, and rollout of OURFOOD a fuss-free platform to bring all types of food businesses online, Teleport has emerged with even stronger growth prospects for the second half of 2020.

“As a great believer in Asean, we remain confident in the growth potential of the region. In IMF’s latest World Economic Outlook, Asean-5’s GDP growth is expected to rebound strongly to 6.2% in 2021, one of the highest growth rates in the world. We’re confident that AirAsia will not only benefit from this growth upturn but also contribute to the region’s recovery given the significant role that air connectivity plays in Asean’s trade and investment landscape.”

On funding…

“We understand the importance of shoring up our liquidity to ensure sufficient cash flow. We have been presented with proposals in various forms of capital raising, be it debt or equity, and are in ongoing discussions with numerous parties, including investment banks, lenders, as well as interested investors in seeking a favourable outcome for the group. We have received indications from certain financial institutions to support our request for funding, amounting to more than RM1.0 billion. Of this debt funding, a certain portion would be eligible for the government guarantee loan under the Danajamin PRIHATIN Guarantee Scheme in Malaysia. Other than Malaysia, our Philippine and Indonesia entities are currently in various stages of bank loan applications. In the Philippines, we have applied for the government guaranteed loan under the Philippine Economic Stimulus Act (PESA), with an expected positive outcome.”

On working capital management,…

“During the hibernation period, we have taken significant measures internally as a group while also reaching out externally for assistance to ensure our working capital remains intact.

“Internally, we have embarked on headcount rationalisation for leaner operations, given the current demand for air travel and expectations on recovery. Internal cost-cutting efforts include a group-wide temporary salary reduction of between 15% – 75%.

“We have received deferrals from our supportive lessors and are now working on further extensions. We have also restructured 70% of our fuel hedging contracts and are continuously negotiating with our supportive counterparties for the remaining exposure.

“All in all, we expect at least 50% reduction in our cash expenses in 2020.

“In conclusion, the impact of Covid-19 pandemic on the Company is never taken lightly, as does the trust and support put into us. The management has been working tirelessly to ensure the sustainability of our business operations. With the confidence of our stakeholders and business partners, we are determined to move forward in this new normal. We are positive that the proactive mitigating actions we have implemented as well as our consistency in transforming the Company would aid us in recovering and overcoming this operating environment.

“In times of difficulties lies opportunities.  We have weathered many crisis and emerged stronger. We won’t waste this crisis and we will come out stronger.”

AirAsia aircraft photo gallery:

AirAsia aircraft slide show:

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A message from AirAsia’s Tony Fernandes, 96% of the fleet grounded

AirAsia issued this statement from the CEO:

When Kamarudin and I started AirAsia nearly 20 years ago, we had a dream of allowing everyone the opportunity to fly. Sadly, that opportunity has now been taken away from us for now.

It’s an uncertain time. Never could I have imagined it, no one could have predicted it and yet everyone has been touched by it. So I want to be open and transparent with you in this time of uncertainty.

There’s no denying that our industry has been hit hard, and we are no exception. This is possibly the biggest challenge we have ever had to face. We have no revenue coming in, 96% of our fleet is grounded and we still have significant ongoing financial commitments such as fuel suppliers and leasing agents.

We are doing everything possible to reduce costs during this time so we can come back fighting as fast as possible and continue to be the world’s best low cost carrier, enabling everyone the ability to fly with our great value and service.

We are one of the few airlines world over who has kept all of our staff on. AirAsia is a family and there are tens of thousands of Allstars who depend on the business for their livelihoods and the wellbeing of their own families. Kamarudin and I will not be taking a salary during this period and Allstars from across the business have accepted temporary pay reductions of anywhere between 15-75%,depending on seniority, to share the impact this is having on our business. I thank them for their sacrifice and in keeping the big picture in mind as we navigate this together.

In spite of all these challenges, I want to assure you that AirAsia is strong and remains firmly focused on the future and serving you, our guests . I also want to express my heartfelt thanks and appreciation to all of you for your loyalty to AirAsia and I hope that you and your loved ones are healthy and well throughout this trying time. I’m truly sorry that many of your travel plans have been affected. Like all airlines, AirAsia had no choice but to cancel a large number of flights due to government restrictions in an effort to contain the spread of COVID-19.

I know many of you have expressed frustration with not receiving a refund for your flights but I encourage you to accept a credit as a good alternative. More than 80 percent of you have accepted our credit offer and we truly appreciate this. Please know that our policy is in line with many operators in the travel industry and reflects our focus on coming out the other side of this difficult period and flying with you again as soon as possible. We have ensured that we adhere to all regulations and requirements of respective governments and consumer authorities and believe this is the best solution. You are among the over 600 million guests who have flown AirAsia and can’t wait to fly with you again once this is over.

While we strongly encourage you to accept the credit which is instant and comes with a 365-day validity and allows you to change your flight date for an unlimited number of times, we do accept requests for refund on a case by case basis. However, due to the overwhelming number of requests that we have received, it may take a long process of between 12 to 16 weeks.

I also want to acknowledge the comments I’ve seen about our virtual Allstar AVA. Please know that we take your feedback seriously and my team is making improvements to the system daily. Currently our team and AVA are handling 10 times the normal volume of queries, which is now at about half a million guests on a daily basis.

We are working tirelessly, around the clock, to provide assistance to each and every one of you. We’ve mobilised additional support to our customer happiness team, including 1,800 Allstars from other functions, who have rolled up their sleeves and volunteered to help, so more live agents are available to assist you via our LiveChat, Facebook Messenger, Twitter & WeChat 24/7.

We’ve never had a time like this before and we are doing our best. We are not always perfect but we strive to do all we can for our people and our customers at all times. This is unprecedented but it is also temporary and we will be back, stronger than before, repainting the skies red and making sure everyone can fly again.

Until then…

Stay home. Be safe. And look to the future.

#InThisTogether

Lots of love,

Tony

AirAsia (Malaysia) aircraft photo gallery:

AirAsia orders more Airbus aircraft

AirAsia has signed two major agreements with Airbus, covering the order of an additional 12 A330neo and 30 A321XLR aircraft, as well as a memorandum of agreement to support the development of the Malaysian aerospace industry.

As part of the deal, Airbus will expand its maintenance, repair and overhaul (MRO) presence in Malaysia and establish the Airbus Malaysia Digital Initiative to enhance the competitiveness of the local aerospace sector through the application of new digital technologies, in line with the government’s vision to make Malaysia a regional aerospace hub.

Airbus will also boost its commitment to the Aerospace Malaysia Innovation Centre (AMIC) – of which it is a founding member – by appointing an Innovation Technical Director and increasing its funding for joint research programmes, including into the production of sustainable aviation biofuels in Malaysia.

The agreements were signed by Airbus CEO Guillaume Faury and Tan Sri Rafidah Aziz, Chairman of AirAsia X Berhad for the aircraft purchase and Datuk Kamarudin Meranun, Executive Chairman of AirAsia Group Berhad for the industrial projects.

The signing ceremony was witnessed by Tun Dr Mahathir Mohamad, the Prime Minister of Malaysia. Also present was AirAsia Group CEO Tan Sri Tony Fernandes.

Airbus is the largest international partner for the Malaysian aerospace industry. Its sourcing and services businesses in the country are now valued at some US$400 million per annum for the local economy, a figure expected to rise to more than US$550 million every year with these new initiatives.

AirAsia also signed an agreement for a firm order of 12 additional Airbus A330neo aircraft, (taking the total from 66 to 78 A330neos on order) and 30 state-of-the-art A321XLR aircraft, to join AirAsia’s future long-haul fleet. The introduction of the A321XLR provides AirAsia X with greater flexibility to better manage capacity on key routes as well as respond to seasonal demand. The A321XLR also gives AirAsia X an advantage when it comes to exploring opportunities to operate non-stop flights between Southeast Asia and secondary cities in countries like Australia, China and Japan.