AirAsia X upbeat on second half performance

PETALING JAYA: Long-haul low-cost carrier AirAsia X Bhd is confident that its financial performance will improve in the second half of this year with the implementation of its capacity management and restructuring exercise.
"We are on track on our recovery plan. In the second half of the year, I am confident that we will see the turnaround plan start kicking in and we will see the numbers getting better," its acting CEO Benyamin Ismail told a press conference after launching its new route network from Kuala Lumpur to Sapporo, Japan yesterday.
"As part of our revamped business plans, we have cut the capacity on routes that we felt were not performing due to competition. But that does not stop us from investing on new routes. The key thing for us is to make sure that we operate routes that make money," he said, adding that the company had cancelled its Narita flights recently.
AirAsia X recorded a net loss of RM125.92 million for its first quarter ended March 31, 2015 compared with a net loss of RM11.28 million a year ago, even though revenue rose 3.45% to RM775.37 million from RM749.48 million a year ago.
Benyamin who opined that second half of the year results would be better than last year however, expects the airline's second quarter financial results ended June 30, 2015 would be similar to the first quarter results.
Commenting on the impact of the weakening ringgit to the airline, he said it had a minor impact on the company's revenue as 45% of its revenue was in Australian dollar, followed by ringgit (30%) and US dollar (20%).
"The weakening of ringgit does impact a bit of our operations. But a lot of our revenue is also in foreign currency, so it equalises it. We manage it very well, so the impact is not as much as what people think it is," he added.
Meanwhile, Benyamin said the new route, which the airline will fly four times weekly from Kuala Lumpur to Sapporo, starting Oct 1, 2015, is part of its growth strategy in North Asia and the Japanese market.
"AirAsia X has carried over 1.5 million passengers between Japan and Malaysia. We are confident this route will also draw more inbound Japanese tourist traffic arriving from Sapporo who is interested to explore surrounding cities in the region.
"This direct route will entice them to visit Malaysia and subsequently connect to various destinations in Asean and beyond," he added, projecting about 100,000 passengers for its Sapporo service in the first 12 months of operation.
Benyamin also expects the new route to start contributing to the company within six months of its operation, noting it has to fill about 75% to 80% passengers to achieve good profitability.
The airline currently serves 18 destinations across Asia, including Haneda, Osaka, Seoul, Shanghai and Beijing, as well as Australia and the Middle East.