AirAsia X cuts 2019 loss despite revenue decline

AirAsia X narrowed its operating loss to MYR90.1 million ($21.3 million), despite a decline in passenger numbers which affected its total revenue.

The loss posted in 2019 is an improvement to the MYR204 million loss made in 2018.

Revenue for the year ended 31 December 2019 declined 4% to MYR4.4 billion, as the number of passengers fell 8.3% to 6.07 million due to capacity cuts it undertook, and weaker travel demand in the first nine months of 2019.

Total expenses fell 5.8% to MYR4.05 billion, on lower expenditures related to fuel, user charges, and other operating expenses.

Unit cost without fuel were 1.9 cents, and including fuel, this was 2.5% lower year-on-year to 3.1 cents. While RASK was unchanged at 3 cents, RPKs were down 3%. Seat load factor was flat at 81%, and that seat capacity declined 2%.

Net loss, however, swelled to more than MYR489 million, on significant increases in finance costs and the adoption of a new accounting standard on leases.

As of 31 December 2019, the company’s cash and cash equivalents stood at nearly MYR308 million, up from the MYR253 million last year.

Overseas units in Indonesia and Thailand saw a mixed performance. Indonesia AirAsia X cut its losses while Thai AirAsia X reversed its previously profitable streak.

Indonesia AirAsia X reduced its operating losses by more than half to MYR36.7 million, after ceasing scheduled services for charter and wet-lease operations at the start of 2019. Revenue for the year stood at MYR76.6 million, while loss before tax was MYR47.3 million.

Thai AirAsia X posted an operating loss of more than MYR137 million for 2019, reversing the operating profit of MYR48.7 million in 2018. Revenue grew 17.3% to MYR1.79 billion, while loss before tax came in at MYR86.5 million.

AirAsia X’s Malaysia chief Benyamin Ismail says the airline has seen “significant improvements” in its business performance, as it focused on improving yields in core markets. It also began a Kuala Lumpur-Singapore service to support the route’s strong demand, as well as Kuala Lumpur-Tokyo Narita.

In its outlook detailed in an investor presentation, AirAsia X plans to cancel unprofitable routes such as Jaipur, Lanzhou and Tianjin, and explore route suspensions as it tries to overcome the challenges from the coronavirus outbreak.

It notes that China represents a third of its capacity, and this “poses [a] severe impact” on the company. An “aggressive” capacity management will be made in the first half of 2020, with more than 600 flights cancelled in March.

To stimulate air travel demand and boost its short-term cashflow, it will also conduct aggressive promotions and waive off fees for its FlyThru transfer service.