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Wed, 25 May 2016

AirAsia X Reports Q1 2016 Net Profit of RM179 Million

AirAsia X Berhad, the long-haul low-cost airline affiliate of the AirAsia Group, has reported a strong Q1 2016 revenue growth of 25% year-on-year to RM971 million, on the back of a 15% increase in passenger traffic and 31% growth in average base fare.

Yields, as measured by Revenue per Available Seat Kilometre, surged 17% year-on-year, outpacing a 7% increase in capacity.

The company registered a healthy load factor of 82%, up 8 percentage points from the same quarter last year, as passenger demand exceeded capacity addition in Q1 2016.

During Q1 2016, the company posted a notable operating profit of RM105 million which, coupled with a forex gain of RM122 million, resulted in a net profit after tax of RM179 million, compared to a loss of RM126 million a year ago.

Datuk Kamarudin Meranun, Group CEO of AirAsia X said, In the past year, we have embarked on various turnaround initiatives to strengthen the companys foundations by addressing our cash liquidity, instituting a more disciplined cost structure and using our consolidated network to earnings growth. We are pleased to announce that these initiatives have resulted in improvements to our core operations.

In Q1 2016, the China market contributed the highest growth to Malaysia AirAsia X operations. Revenue from China increased 49% year-on-year due to higher passenger traffic while average base fare improved 54% year-on-year.

We foresee this positive trend to carry through to 2016 with the implementation of the visa waiver for Chinese tourists visiting Malaysia, and we expect the strong inbound traffic from China to feed into other core markets, said Datuk Kamarudin Meranun.

 Thai AirAsia X recorded a load factor of 88% for the Bangkok-Shanghai route and has recently added Bangkok-Shenyang to its growing network in April. The airline intends to fortify its presence in China with more new routes from Malaysia and Thailand this year.

AirAsia X operations in Korea and Japan have also improved and the airline is strengthening its presence in Australia by resuming capacity growth to high demand routes from Kuala Lumpur while introducing new FlyThru pairings to connect Australia with Asia and the Middle East.

AirAsia X is expanding its footprint in the Middle East with route launches this year. In May, the airline introduced two direct connections to Tehran in Iran from Kuala Lumpur and Bangkok.

With these expansions in place, we are expecting 2016s FlyThru traffic to grow 19% year-on-year and our market share to increase from 3% to 15% of total passengers travelled in our existing markets. The enhanced city pairings for China-Australia, India-Australia and Australia-Tehran will be the key growth drivers in 2016, said Datuk Kamarudin Meranun. In line with our expansion plans, we have welcomed two new operating lease aircraft one each for our Malaysia and Thailand operations bringing AirAsia X Group total fleet to 29 aircraft as at April 2016. We expect to take delivery of two more aircraft in the second half of 2016.

Thai AirAsia X posted a Q1 2016 year-on-year increase in revenue of 87% to US$58 million, in line with the 137% year-on-year traffic growth during this seasonally peak quarter.

 Operating and net profit came in at US$5 million, up 92% from the same quarter last year. Thai AirAsia Xs ability to deliver promising growth despite ICAO implications earlier in the year, proves that Thailand is a resilient tourist hub, and the airline expects Thai AirAsia X to complete its turnaround this year through greater operational synergies with the group to achieve economies of scale and by adding new routes to its rapidly growing network.

Indonesia AirAsia Xs net loss for Q1 2016 narrowed by half to US$4.6 million from US$9.4 million in the same period last year as overall operations improved. However, the airline said that Indonesias operational environment remains challenging due to restrictions imposed by Indonesian regulators.

Benyamin Ismail, CEO of Malaysia AirAsia X, said, While we look into expanding our network, we are monitoring our fundamentals closely to ensure that it is constantly at a healthy level. We have hedged 100% of the companys fuel requirement for the remaining quarters in 2016 at an average jet fuel price of US$54 per barrel on planned existing routes. This will effectively allow us to mitigate fuel cost volatility and better manage cost while we venture into new routes. In Q1 2016, the companys fuel expenses reduced by 11% due to lower fuel prices, which helped to reduce Cost per Available Seat Kilometre for the quarter by 8% year-on-year.

Revenue also improved significantly in Q1 2016 with scheduled flight revenues improving 51% year-on-year, aircraft operating lease income increasing 119% year-on-year, cargo revenue growing 13% year-on-year and ancillary revenue surging 23% year-on-year, including 46% year-on-year growth in revenue from our Premium Flatbed product. We expect ancillary revenue to continue growing by at least 10% this year with the implementation of dynamic baggage pricing, the introduction of new products such as Premium Lounge, extension of inflight entertainment availability to more routes and the activation of 36 new FlyThru city pairings in Q1 2016. In addition, the rising number for passengers carried, especially from China and Middle East markets, is expected to boost consumption rate. The companys balance sheet continued to strengthen with net gearing reduced to 1.20x compared to 1.77x as at 31 December 2015.

Thai AirAsia X Airbus A330-300 Aircraft Tour - HD (May 2014)

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