KUALA LUMPUR (Nov 21): AirAsia X Bhd (AAX) was hit by a RM138.2 million impairment on an amount due from a joint venture in its third quarter ended Sept 30, 2018 (3QFY18), which caused its net loss to widen to RM197.47 million from RM43.3 million in the same period last year.
Also contributing to the decline was higher average fuel price in the quarter under review at US$91/bbl, against US$65/bbl recorded in 3QFY17, AAX said in a filing today. Consequently, its quarterly loss per share widened to 4.8 sen, from 1 sen previously.
Quarterly revenue slid 4% year-on-year (y-o-y) to RM1.08 billion from RM1.12 billion, on the back of decreased scheduled flight revenue, following a 5% drop in average base fare to RM473 per passenger, due to the introduction of new routes and capacity building on established ones.
“The increase of load factor from 79% in 3QFY17 to 80% in 3QFY18 is mitigated by the reduction of average passenger fare,” said the budget airline.
Cost per available seat-kilometer (CASK) grew 12% y-o-y to 14.62 sen due to the increase in average fuel price, and a provision for doubtful debts provided for AirAsia X Indonesia. CASK ex-fuel grew 0.5% from 9.17 sen to 9.21 sen.
For the nine month period ended Sept 30 (9MFY18), AAX fell into the red with a net loss of RM213.43 million versus a net profit of RM14.47 million a year ago, despite higher revenue — up 2% to RM3.4 billion from RM3.34 billion.
The company said it recognises the challenges posed by the recent rise in fuel prices, and efforts are being made to mitigate this by boosting ancillary revenue and capacity.
“A new fares structure has been implemented and the company is actively driving up ancillary revenue which will ultimately improve yields, while management also remains focused on monitoring operating expenses to achieve better cost efficiencies to offset uncertainty in fuel price.
“The company expects operational cost ex-fuel to be lower in the coming quarters, as it starts to see fruits from its cost-saving initiatives, mainly driven by lower aircraft lease rates, cheaper ground handling at foreign stations and from unlocking operational network synergies with short-haul affiliates,” it said.
The airline is adding four aircraft to its fleet this year, two via leases by AirAsia X Malaysia, with one already delivered in October. AirAsia X Thailand is expecting the other two aircraft before year end.
“However, average base fare may be under pressure due to the expected increase in capacity on core established routes, in addition to new routes,” the filing said.
On the slowing of the China market segment which currently contributes a quarter of the group’s total revenue, AAX said it will shift future capacity to “other core markets” such as Japan, South Korea and India.
AAX Thailand is expected to be profitable for the rest of the year, it said. However, AAX Indonesia will cease scheduled service flights beginning next year, amid challenging operating environment, and will only operate non-schedule service flights, moving forward.
“Based on the current forward-booking trend, forward loads are ahead of the previous year. Bookings in the coming months are expected to be stronger year-on-year,” AAX said, not discounting headwinds like fuel cost pressures and intensified competition.
“Notwithstanding concerns over global trade tensions, demand in the short term is expected to remain healthy,” it added.
AAX shares lost half a sen or 2.04% with 22.14 million shares traded to close at 24 sen today, giving it a market capitalisation of RM995.56 million.