Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 22): AirAsia X Bhd (AAX), the long-haul, low-cost affiliate of AirAsia Bhd, returned to profit in the financial year ended Dec 31, 2016 (FY16) after three years of losses, lifted by higher revenue and cost efficiencies.

The airline posted a net profit of RM230.54 million or 5.6 sen per share in FY16, against a net loss of RM349.62 million or 10.4 sen loss per share in the previous year, while operating profit was RM276 million, compared with an operating loss of RM37.4 million in FY15.

Revenue for FY16 rose 30.8% to RM4.01 billion, from RM3.06 billion in FY15.

"We began 2017 on a positive note, with our first full year profit since initial public offering (in 2013), as we strengthen our business in core markets, especially China and Australia," AirAsia X group chief executive officer (CEO) Datuk Kamarudin Meranun said in a statement today.

He noted Australasia routes continue to be Malaysia AAX’s highest revenue contributor at 36%, with 45% y-o-y growth in FY16 on the back of higher passenger traffic due to increased frequencies into Australia; followed by China sectors.

He added that Indonesia AirAsia X A330 services remain temporarily suspended, as part of a network restructuring aimed at improving its operational efficiencies.

“Overall, 2016 has been a great year for AAX despite the challenging environment, demonstrating the commercial viability of the long-haul low-cost model,” said Kamarudin.

However, the airline saw its net profit drop 80.2% to RM39.01 million or 0.9 sen a share in the fourth quarter ended Dec 31, 2016 (4QFY16), from RM197.43 million or 5.9 sen a share a year ago, mainly due to unrealised foreign exchange (forex) loss of RM93.2 million in the current quarter.

Stripping off the forex impact, AAX said its operating profit was actually up 14.2% to RM100.1 million in 4QFY16, from RM87.7 million in 4QFY15, on higher revenue and more cost efficiencies.

Quarterly revenue rose 39.1% to RM1.17 billion, from RM841.14 million in 4QFY15, on the back of a 40% year-on-year (y-o-y) growth in the number of passengers carried to 1.38 million, which was in line with the 44% available seat per kilometer (ASK) capacity growth, allowing the airline to record a load factor of 81%.

In a statement today, AAX said average base fare was down by 4% to RM565 in 4QFY16, mainly attributed to increased flight frequencies to Australia, as well as promotional fares offered on new routes.

Quarterly revenue per available seat kilometer (RASK) also fell 3% to 13.83 sen in 4QFY16, from 14.27 sen in 4QFY15, due to expected increase in capacity on core existing routes in order to grow market share, putting downward pressure on yields. 

However, AAX’s cost — as measured in terms of cost per available seat kilometer (CASK) — declined 11% to 12.88 sen, from 14.5 sen in 4QFY15, thanks to a lower average fuel price environment and improved utilisation of aircraft. As at end 4QFY16, AAX’s total borrowings stood at RM1.16 billion, with a net gearing ratio of 0.69 times.

AAX added based on current forward booking trend, forward loads and average fares are trending better than the previous year.

"However, the depreciation of the ringgit remains a key concern, as a large portion of the company's borrowings and operating costs are denominated in U.S. dollars," said AAX in its statement.

Malaysia AAX CEO Benyamin Ismail said the airline will look to reduce the impact of forex rates by intensifying sales from stronger currency markets such as the Australian dollar, to offset U.S. dollar bills.

"We have also set targets to ensure the company remains lean through various cost initiatives and to maximise the operational synergies between AirAsia and AAX. With this, we have built a recognised brand, exceptional practices, extensive network and we believe AirAsia X is in the right position to fly even higher in 2017," he said.

AAX shares closed unchanged at 41.5 sen today, giving it a market capitalisation of RM1.72 billion.

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