Friday 29 Mar 2024
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KUALA LUMPUR: AirAsia X Bhd (AAX), the long-haul, low-cost affiliate of AirAsia Bhd, carried 20% fewer passengers and filled a smaller proportion of its seats in the second quarter of this year (2Q15), compared with the year-ago period.

AAX carried 810,944 passengers in the April to June period, down from 1.02 million a year ago. The airline’s passenger load factor dropped 12 percentage points to 68% in 2Q15 from 80% in 2Q14.

Revenue-passenger-kilometres (RPK) for 2Q15 fell 23% to 3.89 billion from 5.04 billion in 2Q14, more than its capacity which fell 4% to 1.21 million from 1.26 million. RPK is a measure of sales volume for passenger traffic. Available seat kilometers, which measures a flight’s passenger carrying capacity, also dropped 9% year-on-year to 5.69 billion from 6.27 billion as a result of frequency reduction to Australia as well as the termination of Adelaide and Nagoya services in 1Q15.

In a statement yesterday, AAX said the passenger traffic setback in 2Q15 was in line with the airline’s expectations, as it had stopped its marketing efforts in the first half of this year, following AirAsia’s flight QZ8501 incident and the service disruptions between Melbourne, Australia and Bali, Indonesia, due to the Bali volcano eruption.

The airline also blamed the “continuous irrational competition” posed by national carrier Malaysia Airlines (MAS) with “beyond cost-level fares”.

“[This was] further amplified by a series of unforeseen external factors, such as the Middle East Respiratory Syndrome in South Korea and the massive earthquake in Kathmandu [Nepal].”

“However, impacts from these extraordinary one-off events are expected to diminish very soon,” said AAX.

AAX also said the second quarter is traditionally the weakest quarter of the year for passenger traffic, and thus, it recorded a lower load factor in 2Q15, although it improved its average base fare.

The loss-making airline is aiming to become profitable by the second half of the financial year ending Dec 31, 2015 (2HFY15). Last month, its acting chief executive officer Benyamin Ismail was reported as saying that to make sure that it achieves that, it has to make sure that its seats are 75% to 80% filled.

In May, the airline reported its sixth consecutive quarterly loss since the fourth quarter of FY13 (4QFY13), on higher foreign exchange loss on borrowings which more than tripled to RM89.2 million for 1QFY15, due to the weakening ringgit.

AAX said it sees a return of business from 3Q15 as MAS rationalises its aggressive pricing, and a positive brand image has been reinstated in Australia.

“This is evidenced by promising advance bookings, especially from the Australian market, and the trend is in line with expectations to override the setbacks of the first half of 2015,” it added.

AAX said it had intensified marketing activities in early April and taken initiatives to restore its positive brand image in Australia, which are expected to bear fruit by the second half of the year.

“Meanwhile, [the] excess capacity from this quarter (2Q15), resulting from network consolidation, was deployed to short-term wet lease and charter operations to maximise revenue in US dollars,” it added.

In terms of fleet movement, AAX took the delivery of one A330-300 on operating lease in 2Q15, bringing the total number of its A330-300s to 26, with four based in Thai AirAsia X and two in Indonesia AirAsia X.

AAX’s share price, which now trades far below its initial public offering price of RM1.25, has fallen 63.2% year-to-date from 54.3 sen on Jan 2. It closed unchanged at 20 sen yesterday, with a market capitalisation of RM829.63 million.


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This article first appeared in digitaledge Daily, on August 12, 2015.

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