KUALA LUMPUR (Dec 12): After being mired in the red for the last few years as demand for air travel was clobbered by Covid-19-related restrictions, Capital A Bhd is positive that the group is poised to see an earnings turnaround in 2023.
It incurred a loss of RM283 million in financial year 2019 (FY2019), which ballooned to RM5.89 billion in FY2020. In FY2021, it made a net loss of RM3.72 billion.
For the cumulative first nine months ended Sept 30, 2022 (9MFY2022), Capital A's net loss expanded to RM2.74 billion from RM2.23 billion in 9MFY2021, although revenue grew to RM4.24 billion from RM1.02 billion, mainly due to its share of losses from associates and forex losses.
Speaking at a press conference on Monday (Dec 12) in conjunction with the launch of a new feature for its airasia Super App, Capital A chief executive officer Tan Sri Tony Fernandes said he foresees "three tailwinds" that would lift the group's earnings prospects next year.
"One is oil price, which has gone down a lot. It was at a peak of about US$160 (RM707) for jet oil, [but] it's now at about US$101. That is about a US$60 reduction.
"Secondly, Asean currencies are strengthening [against the greenback]. There may be an interest rate hike [in the US], but I think we have seen the bottom of Asean currencies, while the [US] dollar will not remain where it is.
"The third is China's opening up of its borders [for international travel]," Fernandes noted.
To prepare for China's border reopening, Fernandes said the strategy is to return the grounded fleet back into service next year. To cope with rising demand, the group has been gradually redeploying its fleet, with 135 of its 205 aircraft having returned to the skies.
He projected that the group will have 140 operational aircraft by the end of this year, with the remaining 65 aircraft to be repaired and deployed next year.
"We require about 40 aircraft for China. We hope things begin to open in China by March. So, [we have to] be prepared. The goal now is for AirAsia to get all these aircraft ready," Fernandes said.
He also shared that having all the group's aircraft return to service will have a positive spillover to its other businesses.
"Cargo [business] is a natural; the more planes we give them, it just goes to the bottom line. Aviation services obviously, as more planes come back, their business benefits. That is why I think 2023 could be a watershed year for Capital A," he added.
Still early for listing of digital business
Against this optimistic backdrop for its airline business, Fernandes said there is a knock-on effect on its digital business, namely the airasia Super App and BigPay.
"So this whole ecosystem that we have been incubating over the last two years really comes into force when our airline is fully back in operation, which is not far away. Cargo will benefit with 200 planes, Super App will benefit with more people connecting. So there's a whole lot of this ecosystem that is now being unleashed, which just wasn't there before. So, the ecosystem we are building makes 2023 potentially a very, very profitable year for us," he added.
"Once you start looking at making the high efficiency of using BigPay and Super App together, we obviously have a second-to-none travel ecosystem. We have a ride-hailing system, which I really believe will challenge Grab in Asean. Then, we have a payment infrastructure and finally now community infrastructure, which includes games, content, messaging and gifting.
"I have always said that Super App and BigPay should be and will be as profitable as airlines. As to whether we list this business, it is early days at the moment to talk about it," he said.
In an interview with the Financial Times in June this year, Fernandes said Capital A was planning a New York listing for its low-cost AirAsia airline and its digital business Super App.
On Monday, Capital A introduced new features for its Super App, consisting of airasia chat, games and airasia gifts, which allow the community of airasia members to connect with each other, play games, and share gifts.
Capital A's share price closed half a sen or 0.84% lower at 59 sen on Monday, giving the group a market capitalisation of RM2.46 billion.