Posted on: 26 February 2016 by Mark Howells
AirAsia X Berhad has reported its financial results for the fourth quarter (4Q15) and full financial year ended 31 December 2015, including its first profitable quarter for two years.
Kamarudin Meranun, Group CEO of AirAsia X commented on the business environment and outlook for the company. “During the year under review, the company took the biggest step towards change since its inception, including business and organisational restructuring. We did so to confront both internal and external challenges as well as to strengthen AAX’s financial footing.
“These changes were followed by a multi-phased turnaround plan in 2015, which improved the company’s cash position via rights issues, network plan, distribution platform and with aggressive marketing campaign,” he continued. “Our combined efforts stimulated travel demand in all of our core markets amidst external challenges that were beyond our control such as currency volatility, irrational competition from industry peers waging price wars and overcapacity, MERS and Kathmandu’s earthquake.
“These initiatives continued to show a positive contribution as we achieved the first net profit after eight quarters of losses since 4Q13,” Meranun added. “Our balance sheet also strengthened with net gearing reduced to 1.80x compared to 2.06x in the same period last year. While this accomplishment has set an important cornerstone for AAX’s turnaround plan, we are optimistic that we will achieve further improvement in the coming quarters with higher contribution from ancillary, cargo and better route performance from North Asia on the back of stronger marketing drive. We remain focused on striving for sustainable growth and retain AAX’s competitive edge in this challenging environment through the many strategic initiatives that are in place.”
“As for Thai AirAsia X (TAAX), operating performance improved in 4Q15 with higher average base fare and load factor at 83% during the holiday peak period,” Meranun reported. “We are optimistic that TAAX will prevail once the ICAO-driven restrictions are lifted, as Thailand is a unique tourist hub that shows quick rebound and ultimately stands unaffected regardless of the various challenges. Indonesia AAX (IAAX) was also faced with series of regulatory uncertainties throughout the year and remains challenging.”
“For 2016, the group will remain vigilant with its expansion plans amidst a challenging operating environment that is expected to persist with currency volatility, regulatory uncertainties and external factors,” Meranun concluded.
Benyamin Ismail, CEO of AirAsia X added, “We have seen a strong return in business across all regions as scheduled flight revenue recorded 11% year-on-year growth in 4Q15 despite having less operating routes compared with the same period last year. We expect this positive trend to continue in 2016.
“Operating expenses reduced 4%YoY in 4Q15 mainly attributed to fuel savings of RM128 million as compared to same time last year, spurred by the falling fuel price,” Ismail continued. “In addition, we managed to drive cost lower with a reduction in staff cost, sales and marketing expenses following integration with AirAsia Group, depreciation, one-off expenses and the termination of unprofitable routes. However, further savings were dragged by higher aircraft cost that is denominated in US dollars. In an effort to reduce the impact of foreign exchange rates, the company will continue to intensify sales from stronger currency markets such as the Australian dollar to offset US dollar bills.”
“This year, we’ve strengthened the leadership of our commercial function and have implemented new initiatives in revenue management, ancillary, marketing and distribution to capitalise on the stronger network we have consolidated. We expect these initiatives, coupled with cost reduction efforts, will push our earnings to greater heights in 2016. We are only halfway through the turnaround plan, we have more to do.” concluded Benyamin.