AirAsia X: Q3 was all about oil

SEPANG, 26 November 2018: Disappointing probably best describes AirAsia X’s third quarter results ending 30 September, although the airline laid most of the blame on ‘oil’ in its report headline.

Revenue of MYR1,077.4 million, dipped 4% year-on-year as compared to MYR1,124.5 million in the same period last year, blamed on decreased scheduled flight revenue following a 5% drop in average base fare to MYR473 per passenger in 3Q18.

The airline attributed the drop in base fare to new routes and capacity building on established routes.

In the third quarter, passengers carried increased 1% YoY to 1,511,625 as passenger loads improved post-general elections in Malaysia. This allowed the load factor to grow 1 percentage point to 80%.

But available seat per kilometre capacity decreased 4% YoY to 8,806 million following the redeployment of capacity to the North Asia region following capacity management in Australia, earlier this year, and the termination of Tehran flights last quarter.

Revenue per available seat kilometre also decreased by 1% YoY in what the company believes is the short-term impact from the termination of Tehran and gradual reduction in flights to Kathmandu.

Costs measured in term of cost per available seat kilometre was up by 12% YoY on the back of a 41% hike in fuel price.

The bottom line was an operating loss of MYR205.2 million in 3Q18 as compared to losses of MYR60.2 million in the same period of 2017.

This was mainly attributed to an increase in average fuel price from USD65 per barrel in 3Q17 to USD91 per barrel in 3Q18.

In addition, the group has provided an impairment on amount due from joint venture amounting to MYR138.2 million. Net loss for the quarter stood at MYR197.5 million as compared to RM43.3 million posted during the third quarter of 2017.

AirAsia X Group CEO Nadda Buranasiri said: “We were profitable for two and a half years, and that is partly because of our discipline in carrying out the structuring of our network plans i.e. focusing on routes within 5-8 hours as well as building market share in our core countries for country dominance such China, Japan, Korea and India.

“Our fares were lower during the quarter but that was mainly due to the introduction of new routes as well as additional capacity on established routes. However, our fares have increased by 13% from the previous quarter and we expect to reap further rewards once these routes mature. While we expect that the provision of doubtful debts will place short-term pressures on the full year earnings, we remain confident on the ongoing efforts to boost our ancillary revenue, passenger growth and yields in the longer term.”

Commenting on associates, AirAsia X Thailand he said the weaker financial performances was due to higher fuel costs amidst third quarter being traditionally lean.

“AirAsia X Thailand has managed to drive its average base fare up by 4% YoY to USD130 and has carried 36% more passengers as compared to the same period last year as it took delivery of two additional aircraft in 2018. With Thailand as a natural hub for the tourism sector, we are confident that the Thailand operations will recover in the coming quarter following commencement of the peak year-end travel season,” he noted.

“The long-term story of AirAsia X Malaysia and Thailand remains compelling as the group continues to be agile… From Australia, China and North Asia, we are now expanding our presence in India. In 2018 alone, we launched two new destinations in India—Jaipur in February and Amritsar in August. We see that the demand to fly is soaring as the company’s forward bookings for the fourth quarter and 2019 are ahead of last year’s records.”