AirAsia X extends Q2 net loss of RM128.8m

PETALING JAYA: AirAsia X Bhd's net loss widened to RM128.8 million in the second quarter compared to a net loss of RM32.3 million a year earlier due to higher operating expenses.
The long haul budget airliner said during the three months ended June 30 2014, operating expenses increased by RM299.8 million or 59.1% to RM807.3 million due mainly to higher fuel cost, maintenance and service costs and aircraft operating lease as well as foreign exchnage losses as a result of the strengthening of the ringgit against the US dollar.
Revenue in Q2, however, increased by 36.7% to RM671.6 million from RM491.1 million on significant increases of available seat kilometres (ASK).
In a statement yesterday, AirAsia X said the increase was underpinned by the significant growth in ASK capacity that was introduced in the second-half of 2013, recording a y-o-y growth of 47% to 6.26 billion in 2Q14 and a y-o-y growth of 53% to 12.48 billion in 1H14.
It said passenger traffic volume in revenue-passenger-kilometre (RPK) grew by 44% in 2Q14 to 5.04 billion and by 53.3% to 10.38 billion in 1H14, resulting in a passenger load factor of 80.4% in 2Q14 and 83.1% in 1H14.
For the six months ended June 30, 2014, AirAsia X recorded a net loss of RM140.1 million from a net profit of RM17.9 million while revenue increased by 38.5% to RM1.42 billion from RM1.03 billion.
Although AirAsia X generated three consecutive quarters of net operating losses, the airline expects its prospects to remain positive, barring any unforeseen external circumstances.
In a filing with Bursa Malaysia, the airline said these losses are attributable to significant year-on-year ASK capacity increases over 40%, which resulted in lower yields from a higher proportion of promotional fares used to stimulate new demand creation to fill up the new capacity.
"Our experience suggests that new capacity typically takes about 12 months to break-even. Based on forward sales to-date, we expect to start generating positive year-on-year RASK ( growth in the second-half of this year," it said, referring to the revenue per available seat-kilometer.
Although the capacity expansion created short-term earnings pressure, the airline believes that the investment will bear fruit in the long-term.
"Although our capacity expansion has put short-term pressure on earnings performance, the long-term strategic advantages are very compelling. We now have our strongest route network, with multiple cities in each of our markets, and strong frequencies that lead to convenient transfer connections," its CEO Azran Osman-Rani said.
He added that AirAsiaX have stablised its network, with quarter-on-quarter ASK growth slowing down to single-digit rates.
"Coupled with our position as the lowest unit-cost airline operator and leveraging on the strength of the AirAsia global brand and customer base, we have an unrivalled strong position for the future," he said.
AirAsiaX believes that it now has the highest market share of passengers carried from Malaysia to its core markets in Australia, China, Korea, Japan and Taiwan.
It has also seen a significant increase in the number of connecting passengers between North Asia and Australia, as a result of additional frequencies added to the routes in these markets.