Forex losses hit AirAsia X Q1 earnings

PETALING JAYA: AirAsia X Bhd's net loss widened to RM125.9 million in the first quarter of its financial year ending March 31, 2015 (Q1'15) from RM11.3 million a year ago due to foreign exchange losses.
The group made an operating profit of RM5.9 million for the quarter compared to an operating loss of RM33.1 million for the same period in 2014 due to higher other income.
Other income is derived from gain on disposal of property, plant and equipment, commission income from insurance and advertising activities, concession received from supplier, and marketing incentives received from certain airport authorities.
"In the 1Q15, the company has recognised a net loss of RM126 million, resultant from the high forex exchange loss of RM87 million compared to a RM10 million gain in 1Q14," the long haul budget airlines said in stock exchange filing yesterday.
"The forex exchange rate was recorded at RM3.62, the highest recorded rate compared to the year of 2013 and 2014. This has significantly impacted our result in Q1'15 as 92% of our borrowings are in US dollar. We have also recorded an investment loss of RM15 million in joint venture of Indonesia AirAsia X (IAAX)," it added.
Revenue rose 3.46% to RM775.37 million primarily driven by charters and wet leases, operating lease income and cargo.
AirAsia X CEO Datuk Kamaruddin Meranun said 2014 has been a challenging year whereby profitability was affected mainly by the three tragic aviation incidents, irrational price war and overcapacity posted by the national carrier.
He said AirAsia X have been reviewing all aspects of its business to consolidate the initiatives needed to address the company's internal inefficiencies.
"The key initiatives will be iron out stages by stages, especially in the first half of 2015. We are optimistic that we will see improvements starting from second half of the year and it will lead to a better financial footing in FY2015," he said.
Meanwhile, acting CEO of AirAsia X Benyamin Ismail said the company have seen improvement on its average base fare, resulting from its network consolidation.
"We remain focus in solidifying our capacity management for the first half of 2015 to attain profitability," he said.
"Although this has put short-term pressure on our load factor performance, the long-term strategic advantages are very compelling. With the observed booking trends, we are in line with expectations for a recovery in the second half of 2015," he said.
He said the group hopes to complete its rights issue to raise RM391 million by mid-June 2015 to strengthen our liquidity position.
Potentially, he said AirAsia X is also looking at refinancing of remaining finance lease aircraft and outright sales of two latest deliveries aircraft in the coming second half of the 2015.
"There is no major investment on aircraft this year as all 2015 deliveries are on operating lease and this will minimise the capex outflow for the year. We are also planning to defer two aircraft deliveries for 2016 to manage cash flow," he said.