SEPANG, 27 MAY 2015– AirAsia X Berhad, the long-haul low-cost airline affiliate of the AirAsia Group, today reported its financial results for the First Quarter (“1Q15”) ended 31 March 2015.
Datuk Kamaruddin Meranun, Group CEO of AirAsia X commented on the outlook of the company, “The year of 2014 has been a challenging and extraordinary year for us and the aviation industry as a whole. The profitability in 2014 was affected mainly by the three tragic aviation incidents, irrational price war and overcapacity posted by the national carrier. We are optimistic that we will see improvements starting from Second Half of the year and it will lead to a better financial footing in FY2015.”
“There will be more integration with our partners in 2015 and this is especially with AirAsia BIG who has a large number of members base. There will be more aggressive marketing collaboration with AirAsia BIG to raise awareness of the loyalty programme’s benefits such as redemption of BIG points for free flights and 24 hours priority booking for AirAsia sales. We are also enhancing our integration within the AirAsia Group in promoting the Fly-thru services which enables our passengers to enjoy better network connectivity with lesser hassle of going through immigration processes and having to collect their baggage.”
“Indonesia AirAsia X (“IAAX”) is currently operating with two A330-300 aircrafts serving Bali-Taipei and Bali-Melbourne. Its base in Bali gives IAAX a distinct advantage as the airport holds a potential to cater for greater passenger capacity. In addition, Bali has always been a favourite holiday destination from travellers around the world. We have plans to further enhance our Bali network connectivity by launching additional routes such as Sydney, Australia and Jeddah, Saudi Arabia”.
“The three tragic aviation incidents in 2014 has raised safety concerns in the aviation industry around the globe. Safety is a core value that AirAsia X holds onto and we are committed to ensuring that we meet the most stringent standards in the industry at all time. We have recently received the IATA Operational Safety Audit (IOSA) Registration. The registration in IOSA, the benchmark for global safety management in airlines, has given a natural extension to this commitment. This accomplishment has also allowed us to further strengthen the safety and efficiency of the organization”.
Benyamin Ismail, Acting CEO of AirAsia X said, “We have seen improvement on our average base fare, a result from the implementation of network consolidation. We remain focused in solidifying our capacity management for the First Half of 2015 to attain profitability.”
“In the early quarter, we took off a few cost reduction initiatives such as cutting down our number of crews from 9-man to 8-man crew for certain routes. This has saved us approximately RM8 million, enhanced automations to ensure elimination of redundancy, and implemented no night stops for our cabin crew in certain routes. We are also in the midst of revising contracts and charges from our operational partners and vendors. There will be paperless cockpit for pilots in the Second Half of 2015 with the implementation of Electronic Flight Bag (EFB). This initiative will reduce about 55kg manuals weight on board, which translates to a reduction of fuel burn up to 8.25kg per sector.”
“We remain focused on intensifying our marketing activities in core markets, especially Australia and China where travel demand has softened after the three tragedies last year. We are working towards exploring more exciting collaboration projects with travel agents and tourism bodies to bring back positive travel demands and loyalty. We have relatively new routes such as Chongqing, Xi’an and Narita. We are expecting to see positive yields improvement and earnings turnaround in the Second Half of this year as it typically takes 12-months to reach break-even.”
1Q15 Financial Performance
The Company posted revenue of RM775 million for 1Q15, 3% year-on-year (“y-o-y”) growth from RM749 million during the same period under review. The growth was primarily driven by charters and wet leases, operating lease income and cargo. However, scheduled flight revenue has recorded a decrease of 9% y-o-y to RM460 million in 1Q15 compared to RM504 million in 1Q14, due to a marketing halt in early quarter which caused load factor to drop 12 percentage points at 74% against 86% in 1Q14, with 8% y-o-y higher in average base fare on the back of capacity management.
On the operating level, AirAsia X has recorded a profit of RM6 million, an increase of 118% y-o-y for 1Q15 as compared to a loss of RM33 million for the same period last year. This profit was mainly pulled by higher aircraft operating leases and maintenance expenses. Operating expenses for this quarter saw a decrease of 1% y-o-y in 1Q15 to RM776 million from RM786 million in 1Q14, mainly due to 32% y-o-y drop in jet fuel cost from RM401 million to RM274 million in 1Q15, attributed from lower fuel price.
In 1Q15, the company has recognised a net loss of RM126 million, resultingt from the high foreign exchange loss of RM87 million compared to a RM10 million gain in 1Q14. The foreign exchange rate was recorded at 3.62, the highest recorded rate compared to 2013 and 2014. This has significantly impacted our result in 1Q15 as 92% of our borrowings are in US dollar. We have also recorded an investment loss of RM15 million in joint venture of IAAX.