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AirAsia X Q2 loss up three-fold on higher cost

Publication Date : 20-08-2014


Airasia X Bhd’s second-quarter ended June 30 net loss widened three-fold year-on-year to 128.79 million ringgit (US$40.65 million) from 32.3 million ringgit (US$10.19 million) despite a 36.7 per cent rise in revenue to 671.6 million ringgit (US$211.96 million) in the quarter under review.

The company noted in its financial statements to Bursa Malaysia that despite the rise in revenue, its yield on the revenue per available seat kilometre (ASK) available seat kilometre quantum had dropped 7 per cent to 10.79 sen from 11.6 sen a year earlier.

It said this was the result of significant capacity increase of 48.2 per cent of ASK from June 30, 2013 and the need to stimulate demand to achieve load factor of 80.4 per cent in the quarter under review.

The company also said its basic earnings per share narrowed to -5.4 sen from -12.10 as the weighted average number of shares in issue rose to 2.37 billion.

AAX’s load factor of 80.4 per cent was lower than the 81.8 per cent a year ago.

Its expenses showed a significant increase in costs with total operating expenses increasing by 59.1 per cent to 807.33 million ringgit ($254.80 million) in the quarter from 507.5 million ringgit ($160.17 million) with increases in aircraft fuel expenses as well as maintenance portion.

“Fuel costs increased by 159.5 million ringgit ($50.34 million) or 69 per cent to 390.6 million ringgit ($123.28 million) in the quarter from 231.1 million ringgit ($72.94 million) due an increase in fuel consumption which resulted from an increase in flight frequencies on the existing routes.

Fuel burn has also increased from 1,722 gallons per hour in the second quarter FY13 to 1,832 gallons per hour previously,” the company said.

It noted that average passenger fares dropped 23.7 per cent to 388.07 ringgit ($122.48) from 508.84 ringgit ($160.59) in the previous corresponding quarter due mainly to the competitive fares on the significant increase of ASK.

AAX recognised an unrealised foreign exchange gain on borrowings of 20 million ringgit ($6.31 million) compared with a foreign exchange loss of 30.2 million ringgit ($9.53 million) in its US dollar-denominated borrowings on the strenghtening of the ringgit versus the greenback.

Moving forward, the company said it noted the quarter under review was the third consecutive period of net operating losses but added it expected its prospects to remain positive barring circumstances out of its control.

“These losses are attributable to the third consecutive quarter of significant year-on-year ASK capacity increases over 40 per cent, which resulted in lower yields from a higher proportion of promotional fares used to stimulate new demand creation to fill up the new capacity, it said.

The company meanwhile said that PT. Indonesia AirAsia Extra joint venture has not been granted the Air Operator’s Certificate to date.


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