AirAsia X to cut more costs, defer plane orders

KUALA LUMPUR: AirAsia X Bhd will cut flights on unprofitable routes, reorganise staff and defer some aircraft deliveries to turn around the loss-making long-haul budget carrier, the airline's acting chief executive said yesterday.
"Capacity reduction and cost-cutting within the organisation would be two strategies this year," Benyamin Ismail, the acting CEO of AirAsia X said in a telephone interview. Squeezed by intense competition in Southeast Asia's crowded aviation business, the airline has lost money for the last five quarters.
Ismail was speaking after the affiliate of Asia's largest budget carrier, AirAsia, reported its fourth-quarter net loss widened, hit by a weaker ringgit and charges from fuel contracts that sent shares sliding to an all-time low. Benyamin was named acting CEO for an indefinite period after former chief Azran Osman Rani resigned following a management reshuffle last month.
The executive said the company is focused on returning to net profit in 2015, without disclosing a numerical target.
Despite a drop in its passenger numbers following the end-December crash of a jet operated by its Indonesia affiliate, AirAsia X expects an operating profit in the first three months of this year after October-December generated its first quarterly earnings at that level since third-quarter 2013.
Datuk Kamarudin Meranun, the CEO of AirAsia X Group, which includes other carriers, said in a separate interview that there were no plans for additional fund-raising after a US$109 million (RM396.1 million) rights issue that was announced in January in a move to bolster AirAsia X's balance sheet – now closely watched by analysts.
Acting CEO Benyamin said the airline may look at deferring some plane orders and selling delivery slots.
"If there are reasonable and keen buyers for those aircraft, we may sell the slots," he said.
AirAsia X will also assess capacity requirement based on plane orders and deliveries coming up in the next few years, he said. This would include looking again at orders for Airbus A350 and A330neos, Benyamin said.
The carrier has 10 A350s on order and also ordered 50 A330neo aircraft last year. – Reuters