AirAsia X reports strongest quarter for two years

AirAsia X (AAX) has reported its financial results for the third quarter of 2015 (3Q15), including an EBITDAR of RM188 million – the strongest quarterly performance recorded by the company since 2013.
Revenue grew 13% year-on-year to RM793 million as the result of a 13% increase in scheduled flight revenue and a 155% increase in charter and wet leasing revenue. AAX has also recorded a 25% rise in yields as measured by revenue per available seat kilometre (RASK), attributing this to a rise in average base fare of 15% in comparison to the third quarter of 2014 (3Q14). Despite the sharp depreciation of the USD:MYR rate, the company managed to achieve a 2% decrease in operating cost resulting from the implementation of cost reduction initiatives during the first half of the year.
“The Group has remained focused on reshaping our operations as rapidly as possible for long-term sustainable growth amidst a challenging landscape,” Datuk Kamarudin Meranun, group CEO of AirAsia X, commented. “In 2Q15, we placed great emphasis on strengthening the Australia and China segment with aggressive marketing and brand campaigns focusing primarily on improving our yields. In 3Q15, the initiatives have borne fruit, with strong recovery in yields for both markets: Australia recorded an increase of 17% y-o-y and China improved 32% y-o-y.
“In 4Q15, we have seen recovery in Korea’s passenger traffic after it was declared MERS-free in July. AAX will be launching a number of multi-tier marketing campaigns in Korea and Japan in 4Q15 to increase brand awareness.
“Thailand AirAsia X (TAAX) has recorded a lower operating performance during 3Q15 resulting from ICAO-driven restrictions, but despite limitations, TAAX continued to pursue expansion plans to China with the first direct flight from Bangkok to Shanghai on 28 September 2015.
“Indonesia AirAsia X (IAAX) has seen notable improvement in operating performance with higher load factor and higher average base fare, mainly due to the recovery of the Melbourne service and the termination of its Taipei route at the end of 3Q15. In early October, IAAX announced it has complied with Indonesia’s Ministry of Transportation’s regulatory requirement of minimum 10 aircraft ownership. This brings the IAAX fleet size to 10 aircraft (eight A320s and two A330s). The additional fleet will operate from Bali, Surabaya and Jakarta, tapping on the existing frequency slots from Indonesia AirAsia. These major trunk routes will benefit the group with high volume feeder traffic and improve Fly-thru connectivity.”
Benyamin Ismail, CEO of AirAsia X, continued, “Throughout 2015, we focused on balancing the supply and demand of each market with strategic capacity management. We’ve adjusted our capacity, terminated routes that are less profit making and improved our network with new services to Sapporo and Delhi in 4Q15. The entry to Delhi shows great potential as we now have a much broader sales platform and strong feeder traffic from AirAsia India (AAI). We believe these additions will further enhance our Fly-thru product as it allows more connectivity in our extensive network. The Fly-thru product has achieved growth of 19% quarter-on-quarter to 56% in 3Q15 and is moving towards an upward trend.
“We’ve continued to work on a number of initiatives to achieve positive results moving into 2016. Ancillary income is part of our key revenue component and this quarter we collaborated with Master Chef Asia to introduce new meal selections in November. We have also appointed David Foster as AirAsia X Group and AirAsia Group’s ambassador to front our premium product, which will be introduced in 4Q15. Moving forward, we will be launching initiatives such as value bundle packs and dynamic pricing of baggage fees.
“During 3Q15, we’ve managed to narrow the company’s operating loss to RM31 million as compared to a RM133 million loss for the same period last year. The improvement was primarily driven by the increase of revenue and decrease in operating expenses, however further improvement was hindered by a sharp 36% depreciation of USD:MYR year-over-year, which has caused a substantial forex [foreign exchange] loss of RM241 million in 3Q15. Consequently, we have recorded a net loss of RM288 million in 3Q15. Currency translation remained a key concern moving forward and we have begun efforts to mitigate the increasing dollar denominated cost,” Ismail concluded.

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