REFILE - CORRECTING NAME OF AIRLINE Tail of AirAsia X plane as seen at the Garuda Maintenance Facility AeroAsia in Tangerang, Indonesia, September 20, 2017. Picture taken September 20, 2017. REUTERS/Beawiharta
KUALA LUMPUR: A one-off provision for doubtful debt of RM50.2mil dragged down AirAsia X Bhd
’s (AAX) financial performance during the third quarter (Q3) ended Sept 30, 2017, into the red.
The long-haul, low-cost affiliate carrier of the AirAsia group posted a net loss of RM43.3mil in the quarter versus a profit of RM11.02mil a year earlier despite achieving a 14.5% increase in revenue to RM1.12bil.
AAX group chief executive officer Datuk Kamarudin Meranun said in a statement that despite the tougher operating environment in the seasonally weaker third quarter of the year, the airline managed to serve more passengers and posted higher load factor across all markets it operated in.
“Although the one-off provision of doubtful debt recorded in Q3 2017 has put a short-term pressure on earnings performance, the longer-term story is still very compelling,” he said.
During the quarter under review, passengers carried by AAX’s Malaysian operations were up 23% year-on-year (y-o-y), exceeding the available seat per kilometre (ASK) capacity growth of 18% y-o-y. This allowed load factor to grow a percentage point to 79% as the company continued to stimulate demand and create market dominance in core markets.
Revenue per available seat kilometre (RASK), however, was down 3% y-o-y from 12.70 sen to 12.32 sen due to increased capacity on existing routes and promo fares offered to stimulate new routes.
AAX said the company’s cost, measured in terms of cost per available seat kilometre (CASK) was up 6% y-o-y, on the back of provision for doubtful debt and weaker ringgit against the US dollar.
AAX Malaysia chief executive officer Benyamin Ismail said the company did well operationally in the quarter under review.
“However, the third quarter financial performance was set back by the one-off provision for doubtful debt of RM50.2mil. It is a necessary action that has to be taken as we move on from past management’s business decisions,” he said.
“With the observed booking trends, we are in line with expectations for a recovery in the fourth quarter.”
For the nine-month financial period, AAX earnings fell 92.4% to RM14.47mil. Revenue grew 17.8% to RM3.34bil.
On AAX’s prospects, Kamarudin said the carrier would continue to fine tune its network and introduce new markets that strengthen its network, as well as support its revenue and profitability targets.
“Earlier this month, we launched Kuala Lumpur-Jeju and Kuala Lumpur-Jaipur which will commence inaugural flights in December 2017 and February 2018 respectively. Our bookings for Q4 2017 and Q1 2018 are ahead of last year, showing that demand to fly remains strong and reflects growing evidence that consumers are prioritising expenditure on flights and holidays above other non-essential items,” he said.
“Most importantly, we believe we can end 2017 on a high note as we are confident that Q4 2017 will be a good quarter for us. The group also plans to add third-party leased all-economy class A330s in 2018 to focus on shorter China routes and redeploy our existing fleet to new markets.”
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